Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 14, Problem 8SPPA
To determine
Why Gap is closing its stores. Is it a long run decision or short run decision? Is it taking benefit of economies of scale?
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10. Read this excerpt from the October 18, 2022, Wall Street Journal.
KINDERHOOK, N.Y.—Golden Harvest Farms has grown from a small apple-growing operation when Doug Grout’s grandfather opened it after World War II, to a multipronged business that includes a retail stand, cider press, distillery, tasting room and barbecue restaurant.
But Mr. Grout said he sees a cloudier future for the business due to new state regulations that will require him to increasingly pay more overtime to the farmworkers who pick his apples in the coming years, raising one of his primary costs.
“We were looking to buy another orchard, and that whole thing is tabled,” said Mr. Grout, 52 years old, who co-owns Golden Harvest with his father, as he drove between rows of Honeycrisp trees. “We’re stepping away. You’re going to see farms go out of business. This is very shortsighted.”
For the apple market in New York, the new regulations will:
Cause supply to shift to the left, leading to higher prices and a…
Microeconomics
Q193515
Deadline passed
If the price (P) of maple syrup is $4.00 per can, average cost (AC) is $4.50 per can and average variable cost (AVC) is $3.00 per can, then to maximize profit or minimize loss the firm should:
Answer approved2$1
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Microeconomics
Q194159
4 hours 26 min
1. Briefly discuss two major differences between the theory of perfect competition and the theory of monopoly. 2. What reasons make the demand curve of a perfectly competitive firm completely horizontal? Only state.
3. Represent the information below in an appropriately labelled diagram with the relevant curves, and decide whether the firm should continue production or shut down in the short run, using calculations. A perfectly competitive firm produces 100 mugs to maximize its profit. The average total cost (ATC) is 13 taka per mug and the average fixed cost (AFC) is 4 taka per mug when the firm produces 100 mugs. The…
11. Costs in the short run versus in the long run
Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost each month for various levels of production if it uses one, two, or three factories. (Note: QQ equals the total quantity of bikes produced by all factories.)
Number of Factories
Average Total Cost
(Dollars per bike)
QQ = 100
QQ = 200
QQ = 300
QQ = 400
QQ = 500
QQ = 600
1
140
60
40
80
160
320
2
230
110
40
40
110
230
3
320
160
80
40
60
140
Suppose Ike’s Bikes is currently producing 500 bikes per month in its only factory. Its short-run average total cost is
per bike.
Suppose Ike’s Bikes is expecting to produce 500 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using .…
Chapter 14 Solutions
Foundations of Economics (8th Edition)
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