Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 3P
To determine
Shutdown point.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Tim Marlow, the owner of The Clock Works, wanted to know how many clocks he must sell in order to cover his fixed cost at a given price. Tim knew that he had a fixed cost of $20,000 for equipment, taxes, and a bank loan. He also had a unit variable cost of $20 per clock for labor, materials, and promotional costs. If the price Tim charges for each of his clocks is $40, what is his break-even point quantity?
Billy’s Bean Bag Emporium produced 300 bean bag chairs but sold only 275 of the units it produced. The average cost of production for each unit of output produced was $100. The price for each of the 275 units sold was $95. What is the Total profit for Billy’s Bean Bag Emporium? Include in your answer your calculation
Your niece is deciding whether or not to open a lemonade stand. She expects to sell 20 cups of lemonade for $1 per cup. She already made a sign that cost her $10 and will have $15 worth of additional costs for cups and lemonade mix if she decides to open the stand. If your niece decides to open the lemonade stand, how much profit will she earn? Show how you arrived at this number. Should she open the lemonade stand? What kind of cost is the $10 spent on the lemonade stand sign?
Knowledge Booster
Similar questions
- Karen runs a print shop that makes posters for large companies. It is a very competitive business. The market price is currently $1 per poster. She has fixed costs of $250. Her variable costs are $1,000 for the first thousand posters, $800 for the second thousand, and then $750 for each additional thousand posters. What is her AFC per poster (not per thousand!) if she prints 1,000 posters? 2,000? 10,000? What is her ATC per poster if she prints 1,000? 2,000? 10,000? If the market price fell to 70 cents per poster, would there be any output level at which Karen would not shut down production immediately?arrow_forwardNicole purchased a new printing machine and started a small printing shop. As per her calculations, to earn revenue of $6,000 per month, she needs to sell printouts of 27,000 sheets per month. The printing machine has a capacity of printing 35,300 sheets per month, the variable costs are $0.03 per sheet, and the fixed costs are $2,200 per month. a. Calculate the selling price of each printout. Round to the nearest cent b. If they reduce fixed costs by $310 per month, calculate the new break-even volume per month. Round up to the next whole number c. Calculate the new break-even volume as a percent of capacity. ↑ % →arrow_forwardA bakery sells pretzels. The fixed costs come to $8,750.00 per month. It will cost 35 cents to make each pretzel, and the bakery will charge $1.50 per pretzel. The bakery must sell 7,609 pretzels in a month to break even. The bakery's owners think they may not be able to sell that many pretzels. If they raise the price to $1.75, what will be the break-even point? Hint: use the Break-even point formula.arrow_forward
- Peter runs a small local newspaper company. He can sell a newspaper at $2. He has fixed costs of $10,000. His variable costs are $1,500 for the first thousand newspapers, $1000 for the second thousand, and then $600 for each additional thousand newspaper.Can he make profit at current market price? What is the breakeven price in this business (assuming maximum production at 10,000 newspaper)?arrow_forwardKasey Puzzle, Inc. sells geography-based puzzles. Kasey currently sells 25,000 units a month for $40 each, has variable costs of $20 per unit, and fixed costs of $300,000. Kasey Puzzle is considering increasing the price of its units to $60 per unit. This will not affect costs, but demand is expected to drop 20%. Should Kasey Puzzle increase the price of its product? с Multiple Choice O O Yes, profit will increase $500,000. No, profit will decrease $500,000. No, profit will decrease $300,000. Yes; profit will increase $300,000.arrow_forwardWalt's Turkey Farm produced 400 turkeys last week. The marginal cost was $15 a turkey, average variable cost was $29 a turkey, and the market price was $33 a turkey. Did Walt maximize profit? If Walt did not maximize profit and if nothing has changed, will he increase or decrease the number of turkeys he produces to maximize his profit this week? profit, so if nothing changes he will Walt is the number of turkeys he produces to maximize his profit this week. O A. maximizing; decrease O B. maximizing; increase OC. maximizing; not change O D. not maximizing; increase O E. not maximizing; decreasearrow_forward
- Tomas is the general manager for a local automated car wash. The market he operates is perfectly competitive. Every car wash in the area is charging $7 for a car wash, which is also the marginal cost per wash. What will happen to Tomas’ profits if he changed his price to $8. Why? What about a price of $5?arrow_forwardKaren runs a print shop that makes posters for large companies. It is a very competitive business. The market price is currently $1 per poster. She has fixed costs of $100. Her variable costs are $1,000 for the first thousand posters, $800 for the second thousand, and then $750 for each additional thousand posters. Instructions: Enter your answers rounded to two decimal places. a. What is her AFC per poster (not per thousand!) if she prints 1,000 posters? $ What if she prints 2,000 posters? What if she prints 10,000 posters? b. What is her ATC per poster if she prints 1,000? What if she prints 2,000? What if she prints 10,000? 2$ c. If the market price fell to 70 cents per poster, would there be any output level at which Karen would not shut down production immediately? |(Click to select) ♥ %24arrow_forwardMake or buy decision Dani’s Doohickeys can buy widgets from The Widget Company for $10 apiece or make them in-house. Dani already has a factory for making thingamajigs and current fixed manufacturing costs are $10,000. Here is how Dani expects her costs to look with 1,000 widgets being built in-house: Hourly rate paid to workers in the widget manufacturing department $20.00 Hourly rate paid to the widget manufacturing department supervisor $32.00 Man hours per widget (4x supervisor hours) 0.25 hr Direct maarrow_forward
- Tammy quit her job as a math teacher making $70,000 per year to start her own online business. The first-year revenue totaled to $200,000. During the first year of online business, Tammy paid $50,000 for the office rent and $20,000 for utilities and supplies. What is the amount of economic profit generated from Tammy’s online business?arrow_forwardThe table gives some of the costs of the Delicious Pie Company. The marginal cost per pie of increasing the output of pies from 100 to 200 is Total variable cost (dollars) Output (pies) 0 100 200 300 400 $8.00 $600 $6.00 $5.00 0 400 1,000 1,800 2,800 Total cost (dollars) 300 700 1300 2100 3100 ?arrow_forwardSuppose you are thinking about starting a lawn service in your area. The lawn service market can be considered perfectly competitive. You own a $200 lawnmower. You have a fixed cost of $90 (maintenance costs on the mower, etc.). Your variable costs are as follows: # of Lawns Mowed Total Variable Costs Fixed Cost 1 $5 90 2 $15 90 3 $30 90 4 $50 90 5 $75 90 6 $105 90 7 $140 90 8 $180 90 9 $225 90 10 $275 90 a) Calculate Total Costs, Average Total Costs, Average Total Costs, Average Variable Costs, and Marginal Costs. b) Suppose that the going rate for lawns is $35 per lawn. How many lawns would you mow?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning