EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Question
Chapter 9, Problem 11SP
To determine
Identify whether the company produces an additional unit of jelly bean at the price $1.5.
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Students have asked these similar questions
Which of the costs discussed in the chapter is the most important when a firm is deciding how much to produce?
Costs that are spent to improve the image of the firm. A firm will choose to increase output if it spends a large amount on advertising and brand image.
Fixed costs because these costs are spent and cannot be changed in the time period under consideration. If fixed costs are higher, the firm will choose to produce more output.
Variable costs because these costs change as output changes. If the firm wants to maximize profits, it will choose to produce a quantity where variable costs are minimized.
Marginal cost because this cost shows the additional cost associated with producing one more unit of output. Firms will use this information to decide to produce more or less output.
Bill runs a business that makes custom-printed towels. It will cost him $8 each to purchase and print on towels, and he will have to pay a rent of $1,700 per month for him workshop. Based on market research, Bill estimates that he can sell custom towels for $25 each.
a) Calculate the number of towels he needs to sell per month to break-even.
towels
b) Calculate the break-even in dollars (round off to the nearest cent).
Suppose a firm is currently maximizing profit by producing 100 units of output per day. It is then
discovered that the firm owes $1,000 for a one-time tax violation that occurred a few years ago. The
firm now needs to pay the $1,000 to the government no matter what. How should the firm react to this
additional cost?
The firm should increase output in order to increase revenue enough to cover the additional cost.
The firm should continue to produce 100 units of output per day, as the $1,000 is a sunk cost and therefore has
no effect on production decisions.
The firm should shut down in the short run and start back up in the long run.
The firm should decrease output in order to decrease variable costs by $1,000.
Chapter 9 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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