Royersford Knitting Mills, Ltd. sells a line of women’s knit underwear. The firm now sells about 20,000 pairs a year at an average price of $10 each. Fixed costs $60,000, and total variable costs equal $120,000. The production department has estimated that a 10 percent increase in output would not affect fixed costs but would reduce average variable cost by 40 cents. The marketing department advocates a price reduction of 5 percent to increase sales, total revenues, and profits. The arc elasticity of demand is estimated at -2. Evaluate the impact of the proposal to cut prices on (1) total revenue, (2) total cost, and (3) total profits. If average variable costs are assumed to remain constant over a 10 percent increase in output, evaluate the effects of the proposed price cut on total profits.

Management believes it can sell a new product for $8.50. The fixed costs of production are                estimated to be $6,000, and the variable costs are $3.20 a unit. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs. Quantity Total Revenue Variable Costs Fixed Costs Total Costs Profits (Loss) 0           500           1,000           1,500           2,000           2,500           3,000               Determine the break-even level using the above table and use the following Equation to confirm the break-even level of output. PQB = FC + VQB PQB - VQB = FC QB (P-V) = FC QB = FC         P-V What would happen to the total revenue schedule, the total cost schedule, and the break-even level of output if management determined that fixed costs would…

Table Cost.EX2: Costs and Outputs for a Competitive Firm Total Total Output Fixed Variable (Q) Costs (TFC) Costs (TVC) $40.00 $0.00 1 $40.00 $40.00 $40.00 $90.00 $40.00 $130.00 4 $40.00 $190.00 5 $40.00 $260.00 Refer to Table Cost.EX2. At 3 units of output, average variable cost and average total cost are and respectively. $47.50; $70.00 O $47.50; $56.67 $43.33; $70.00 $43.33; $56.67

A price-taking firm's variable cost function is VC = 20³, where Q is its output per week. It has a sunk fixed cost of $108 per week. Its marginal cost is MC = 6Q². a. What is the firm's supply function when the $108 fixed cost is sunk? Instructions: Enter your answer as a whole number. Q = (P/6) 0.5 for Pz $| b. What is the firm's supply function when the fixed cost is avoidable? Instructions: Enter your answer as a whole number. Q = (P/6) 0.5 for Pz $ 216 ✪ 0

Tåble Cost.EX2: Costs and Outputs for a Competitive Firm Total Total Output Fixed Variable (Q) Costs Costs 0. $50.00 $0.00 1 $50.00 $70.00 $50.00 $120.00 $50.00 $150.00 4 $50.00 $220.00 $50.00 $300.00 Refer to Table Cost.EX2. When production is 3 units, the firm's average total cost is'about O $66.67 $68.67 No answer text provided. O No answer text provided.

Economics

The publisher of a magazine gives his staff the following information: Current price Current sales Current revenue Current total costs $2.00 per issue 150,000 copies per month $300,000 per month $450,000 per month He tells the staff, "Our costs are currently $150,000 more than our revenues each month. I propose to eliminate this problem by raising the price of the magazine to $3.00 per issue. This will result in our revenue being exactly equal to our cost." Refer to the table above, which of the following statements is correct? The publisher's analysis is correct only if the demand is elastic. The publisher's analysis is correct only if the demand is perfectly elastic. The publisher's analysis is correct only if the demand is unit elastic. The publisher's analysis is correct only if the demand is perfectly inelastic.

Table Cost.EX2: Costs and Outputs for a Competitive Firm Total Total Output Fixed Variable (Q) Costs (TFC) Costs (TVC) $40.00 $0.00 $40.00 $40.00 4 $40.00 $90.00 9. $40.00 $130.00 8. $40.00 $190.00 10 $40.00 $260.00 Refer to Table Cost.EX2. For 8 units, the average total cost is about O $23.75 O $26.75 O $30.00 $28.75

After serving as President of the United States for eight years, Dena has retired from politics and has decided to become a wheat farmer. The market for wheat is perfectly competitive and the current market price for wheat is $10 per bushel. Dena is currently producing 8 bushels (Dena can only produce this good in whole units). Her total cost at 8 units of output is $88 and her variable cost at 8 units of output is $64. Dena knows that if she produces a 9th unit her total cost will become $97, and if she produces a 10th unit her total cost will become $110. Dena’s goal is to maximize her profits. Based on this information, identify whether each of the following would be true or false and briefly explain your reasoning.  Dena is currently losing money in the short-run and she would be better off if she shutdown and produced zero. Dena is not currently profit maximizing at 8 units of output and she could increase her profits if she expanded output by one unit. Dena would increase her…

Price ($/slice) For the pizza seller whose marginal, average variable, and average total cost curves are shown in the graph below, what is the profit- maximizing level of output and how much profit will this producer earn if the price of pizza is $2.50 per slice? Instructions: In the graph below, label all three curves by clicking on the dropdown to select the appropriate label. Then, indicate the profit-maximizing level of output on the graph. 3.50 3.25 3.00 2.75 2.50 2.25 2.00 1.75 1.50 1.25 1.00 0.75 0.50 0.25 0 Cost Curves Tools -O Select ▼ Select ▼ Select ▼ Q* 100 200 300 400 500 600 700 800 900 Quantity (slices/day)