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
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Chapter 25, Problem 8CQ
To determine
Explain whether hiring of labor and capital minimizes the cost of dressmakers.
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Remembering the learning activity in Unit 3, the Gondwanaland chairman of production reported that the gosum berry growers could meet a demand of 700 barrels of gosum berries per month at a price of $70 per barrel.
Then the growers were plagued with a gosum berry bug infestation that reduced output, causing production to fall to only 600 barrels. This resulted in a price increase to $84 per barrel. The following table shows the chairman’s report:
Month
Monthly barrels of gosum berries demanded
Price per barrel
June
700
$70
July
600
$84
Using the midpoint method, show your work and calculate the price elasticity of demand for Gondwanaland gosum berries. Explain what this price elasticity of demand means?
Complete the table below by calculating what the monthly total revenue is for June, what the monthly total revenue is for July, and the change in total monthly revenue for these two months. How have these numbers changed?
(Enter your response…
The graph shows the Cost curves for a profit maximizing firm in a competitive market. If the market price is $30 and the firm produces at the profit maximum quantity, what is the amount of the total fix cost
For each of the following events identify which of the determinates of demand or supply are affected. Also indicate whether demand or supply is increased or decreased. Why?
A stock market crash lowers people’s wealth.
Batelco increases the prices of mobile services.
Diminishing returns mean rising costs while economies of scale mean falling costs. Therefore, a firm cannot be facing both diminishing returns and economies of scale. Do you agree? Why or why not?
Chapter 25 Solutions
Economics: Private and Public Choice (MindTap Course List)
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- Suppose cowboy boots and leather vests are complements. If the price of cowboy boots increases significantly, what should we expect to happen to the supply curve for leather vests in the short run? We expect the supply curve to shift right. We shouldn't expect anything in particular to happen to the supply curve. We expect the supply curve to shift left.arrow_forwardA perfectly competitive market is in a long-run equilibrium. Prices of variable inputs for the typical firm decrease. Describe what will happen in the short run, to the typical firm’s marginal costs, average fixed costs, average costs, profits, and production as the firm makes its choices. In each case, describe why those changes take place. Describe exactly why the firm decides to make changes. As part of that discussion, summarize what happens in the market and how those changes relate to the typical firm. You do not need to discuss why the changes take place in the market. Outline in several sentences what will happen in the long run to the typical firm and the market.arrow_forwardIsabella grows pumpkins. Her average variable cost (AVC), average total cost (ATC), and marginal cost (MC) of production are illustrated in the figure to the right. Assume the market for pumpkins is perfectly competitive and that the market price is $5.00 per box. How many pumpkins should Isabella grow? Isabella should produce integer value.) thousand boxes of pumpkins. (Enter your response as an Price ($ per box) 10.00- MG ATC AVC 9.00- a 8.00- G 7.00- 6.00- 5.00- 4.00- 3.00- 2.00- 1.00- 0.00- 0 2 3 5 6. Quantity (boxes in thousands)arrow_forward
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