Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 25, Problem 3CQ
(a):
To determine
Quantity of operators hired at a weekly wage of $250.
(b):
To determine
Maximum profit of the firm when the fixed cost is $1,500 per week.
(c):
To determine
Condition of the firm when the market price for each statement falls to $150.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose a firm has the following expenditures per day: $250 for wages and salaries, $50 for materials, $60 for equipment, and $40 for rent. The market wage for the manager is $120 per day but the owner-manager does not draw a salary. Assume the daily revenue is $420.
What is the accounting profit for the firm described above? Just give equation formula.
Suppose a firm has the following expenditures per day: $250 for wages and salaries, $50 for materials, $60 for equipment, and $40 for rent. The market wage for the manager is $120 per day but the owner-manager does not draw a salary. Assume the daily revenue is $420.
What are the daily economic costs for the firm described above? Just give equation formula.
Let's assume that a firm's total weekly costs are as follows: 1. Salaries = $5000. 2. Supplies = $1000. 3. Rent = $600. In addition, the owners have invested $30,000 of their own money into the business. This could have earned them interest of $100 per week if they had chosen to put it into a bank instead of investing it into their business. If the firm has weekly revenue of $20,000, the firm's accounting profit is ____________, and the economic profit is _____________.
Loss of $18,987; profit of $5,690
Loss of $16,600; loss of $16,700.
Loss of $16,700; loss of $16,600.
$13,300; $13,400.
$13,400; $13,300.
Chapter 25 Solutions
Economics: Private and Public Choice (MindTap Course List)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- Yuri has been offered a job with a weekly wage of $800. Yuri declines the offer and starts a tutoring business of his own. He rents a classroom for $200/week. Additional material costs are $5 per student per one-hour tutorial. Tultion is $30 per student per tutorial (regardless of the size of the tutorial class). a) What is the weekly accounting profit function for Yuri’s business? b) What is the weekly economic profit function for his business? c) What is the economic breakeven number of tutorial hours per week? d) Does Yuri’s business exhibit economies of scale? Explain. Only d is needed can u solve only darrow_forwardimagine you are aB2B e-commerce company who provides supply chain management software to other companies. Please give one example for each of the following terms that will be appropriate for your company: early outsourcing, late outsourcing, and partial outsourcing in e-commerce. Please explain why each type of outsourcing is appropriate for your company in each example.arrow_forwardWhy would a profit-maximizing firm expand the use of each input until its marginal revenue product equals the price of the input?arrow_forward
- 12. A firm’s production is represented by the following function: Q = L0.4 K0.6 . The rental rate of capital (r) is $30 and the wage rate (w) is $5. For a given level of output, what should be the ratio of capital to labor in order to minimize costs? How much capital and labor should be used to produce 600 units of output? What is the total cost? What is the short run total cost if output is decreased to 300 units? What would be the optimal choice of capital and labor in the long run in order to produce 300 units of output? What is the long-run total cost? Does this production function exhibit increasing, decreasing, or constant returns to scale? Please answer based on the cost calculations in parts c and d.arrow_forwardIn the short run, a tool manufacturer has a fixed amount of capital. Labor is a variable input. The cost and output structure that the firm faces is depicted in the table below. Assume the product price is $6. Calculate the marginal revenue product and the marginal resource cost, and then complete the table. Instructions: Enter your answers as whole numbers. Quantity of Labor Marginal Product Marginal Revenue Product ($) Hourly Wage Rate ($) Marginal Resource Total Product Total Labor Cost ($) (Labor) Cost ($) 10 400 90 11 416 16 12 132 12 430 14 15 180 13 442 12 18 234 14 452 10 21 294 15 460 8. 24 360 The equilibnum wage rate ($) 3 The equilibrium level of labor use = workersarrow_forwardIn the short run, a tool manufacturer has a fixed amount of capital. Labor is a variable input. The cost and output structure that the firm faces is depicted in the table below. Assume the product price is $4. Calculate the marginal revenue product and the marginal resource cost, and then complete the table. Instructions: Enter your answers as whole numbers. Quantity of Labor Marginal Product Marginal Revenue Hourly Wage Rate ($) Marginal Resource Total Product Total Labor Product ($) Cost ($) (Labor) Cost ($) 10 400 5 50 es 11 420 20 8. 88 12 438 18 11 132 13 454 16 14 182 14 468 14 17 238 15 480 12 20 300 The equilibrium wage rate ($) = The equilibrium level of labor use = workersarrow_forward
- Yuri has been offered a job with a weekly wage of $800. Yuri declines the offer and starts a tutoring business of his own. He rents a classroom for $200/week. Additional material costs are $5 per student per one-hour tutorial. Tuition is $30 per student per tutorial (regardless of the size of the tutorial class). 3a) What is the weekly accounting profit function for Yuri's business? 3b) What is the weekly economic profit function for his business? - --- ---- 3c) What is the economic breakeven number of tutorial hours per week?arrow_forwardProblem 06-05 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 $0.25 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. Cost Curves 3.50 3.25 3.00 2.75 2.50 2.25 2.00 1.75 81.50 1.25 1.00 0.75 0.50 0.25 0 Select Select Select 100 200 300 400 500 600 700 800 900arrow_forwardQuestion 8 Suppose a firm's production function is: q = √KL Assume capital is fixed at 4 units, and the rental rate on capital is 10 and the wage rate is 8. Which of these represents the firm's total cost equation (expressed as a function of q)? O TC = 2q² + 32 O TC = 2q² + 40 O TC = 2q0.5 + 40 O TC = 4q² + 40 O none of the abovearrow_forward
- 2. Consider the following information of a hypothetical firm: Q = 100K0.6 L0.8; w = = 1; r = 3 A. Solve for the cost-minimizing quantity of capital (K*) and labor (L*), and the minimum cost (C*) if the firm targets to produce 3,000 units of output. B. If target output increases to 6,000 units, solve for the new cost-minimizing quantity of capital and labor, and the minimum cost. I C. Graphically illustrate the expansion path for the firm if it decides to increase its target output from 3,000 units to 6,000 units.arrow_forwardProblem 06-04 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 $2.50 per slice? Instructions: In the graph below, label all three curves by clicking on the dropdown to select the appropriate label. Then, indicate the profit-maximizing level of output on the graph. Price ($/slice) 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 Select Select Quantity (slices/day) Select 100 200 300 400 500 600 700 800 900 Tools -i At the profit-maximizing level of output, the producer's profit is: $ per day. 0arrow_forwardYou are given the following table by one of your analysts. Provide the profit maximizing point and explain how you would determine how much labor you will need to maximize profits. Table picturedarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning