You are a newspaper publisher. You are in the middle of a one-year factory rental contract that requires you to pay $500,000 per month, and you have contractual salary obligations of $1,250,000 per month that you can't get out of. You also have a marginal printing cost of $0.25 per paper as well as a marginal delivery cost of $0.10 per paper. Instructions: Enter your answers rounded to two decimal places. a. If sales fall by 20 percent from 1,000,000 newspapers per month to 800,000 newspapers per month, what happens to the AFC per newspaper? AFC per newspaper (Click to select) from $ to $ b. What happens to the MC per newspaper? MC per newspaper (Click to select) c. What happens to the minimum amount that you must charge to break even? It (Click to select) v from $ to $

Question 37 [ DIFFICULT] Consider two firms, both producing the same product, using the same production technology given by: q = √√K This production technology implies the following MRTS: K MRTS=AY ΔΧ L where K is the amount of capital used and L is the amount of labour used to produce output. It can be shown that this production technology implies the following minimised total cost function: TC = 2q√w√r where w represents the per-unit cost of labour and r represents the per-unit cost of capital. Suppose each firm can hire labour at $1 per unit and capital at $9 per unit. Each firm produces 90 units of output. One firm (Firm 1) chooses its input combination to minimise costs of production. However, Firm 2 instead produces output using twice as much labour as Firm 1. Compared to Firm 1, how much higher are Firm 2's cost of production? a) $270 b) $67.50 c) $275 d) $135 e) $132 Hint: It can be shown that the cost-minimising quantities of capital and labour (chosen by Firm 1) are K = 30…

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Suppose a local developer has built 24 houses so far this year at a total cost to the company of $4.8 million. If the company builds the 25th house, its total cost will increase to $5 million. Which of the following is correct? - all of the above - the marginal cost of the 25th house, if it is built, will be $200,000 - if the company can sell the 25th house for $250,000, then it should build it - for the first 24 houses, the average cost per house was $200,000