11 Suppose Jill Johnson operates her pizza restaurant in a building she owns in the center of the city. Similar build- ings in the neighborhood rent for $4,000 per month. Jill is considering selling her building and renting space in the suburbs for $3,000 per month, but she decides not to make the move. She reasons: "I would like to have a restaurant in the suburbs, but I pay no rent for my restaurant now, and I don't want to see my costs rise by $3,000 per month." Evaluate Jill's reasoning.
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- 3. Suppose that ABC company plans to build a subway train to provide better alternatives for Filipino commuters to avoid heavy traffic and delay during rush hour. Apparently, the subway can last up to 50 years only that its cost $ 5.5 million to build it. Assuming that it cost nothing for its maintenance. Consider the table below that shows potential demand of the subway train of the ABC company. For now, disregard the potential variety of the passenger's demographic.2. Consider a fast-food restaurant. The following table shows the maximum price that Alex and Anna will pay for two products: chicken nuggets and fries. Customer c. d. Alex Anna Maximum Price Nuggets $1.50 $2.55 Fries $1.50 $0.45 Bundle Price $3.00 $3.00 Assume that marginal cost of chicken nuggets is $1.00 and marginal cost of fries is $0.50. a. Are Alex and Anna demands negatively or positively correlated? Explain. b. Compare all four possible single-item pricing policies to find the profit-maximizing single-item pricing policy. Solve for profit if the restaurant engages in pure bundling. Assume the restaurant engages in mixed bundling and charges $3 for a bundle, $2.52 for chicken nuggets and $1.50 for fries. Show that the profit obtained under mixed bundling will be higher than under the pure bundling or single-item pricing.1. A firm has three different production facilities, all of which produce the same product. Whilereviewing the firm’s cost data, Ron, a manager, discovered that one of the plants has a higher averagecost than the other plans and suggests closing this plant. Another manager, Jack, notes that the high-cost plant has high fixed costs but that the marginal cost in this plant is lower than in the other plants.He says that the high-cost plant should not be shut down but should expand its operations. Who isright? 2. Should a firm shut down if its weekly revenue is $1,000, its variable cost is $500, and its fixed cost is$800, of which $600 is avoidable if it shuts down? Explain.
- 6 In 1916, Henry Ford was quoted as saying the following: "There are men who will pay $360 for a car who would not pay $440. We had in round numbers 500,000 buyers of cars on the $440 basis, and I figure that on the $360 basis we can increase sales to possibly 800,000 cars for the year - less profit on each car, but more cars, more employment of labor, and in the end we get all the total profit we ought to make." If Ford's estimate as correct, what was the price elasticity of demand for his cars? By how much did total revenue increase? 7 Using the data from question 6, above, write the demand curve equation for Henry Ford's cars. 8 Using the demand curve equation from question 7, build a graphic to sell Ford cars to the public in 1916.6 In 1916, Henry Ford was quoted as saying the following: "There are men who will pay $360 for a car who would not pay $440. We had in round numbers 500,000 buyers of cars on the $440 basis, and I figure that on the $360 basis we can increase sales to possibly 800,000 cars for the year - less profit on each car, but more cars, more employment of labor, and in the end we get all the total profit we ought to make." If Ford's estimate as correct, what was the price elasticity of demand for his cars? By how much did total revenue increase?D 3 om for the four Juanita's Performance Pizza is a small restaurant in Dallas that sells gluten-free pizzas. Juanita's very tiny kitchen has barely enough ovens in which her workers bake the pizzas. Juanita signed a lease obligating her to pay the rent for the four ovens for the next year. Because of this, and because Juanita's kitchen cannot fit more than four ovens, Juanita cannot change the number of ovens she uses in her production of pizzas in the short run. However, Juanita's decision regarding how many workers to use can vary from week to week because her workers tend to be students. Each Monday, Juanita lets them know how many workers she needs for each day of the week. In the short run, these workers are variable inputs, and the ovens are fixed inputs. Esc Juanita's daily production schedule is presented in the following table. Fill in the blanks to complete the Marginal Product of Labor column for each worker. Output Marginal Product of Labor (Pizzas) (Pizzas) Labor (Number…
- 3. Suppose that ABC company plans to build a subway train to provide better alternatives for Filipino commuters to avoid heavy traffic and delay during rush hour. Apparently, the subway can last up to 50 years only that its cost $ 5.5 million to build it. Assuming that it cost nothing for its maintenance. Consider the table below that shows potential demand of the subway train of the ABC company. For now, disregard the potential variety of the passenger's demographic.bo Use the table below to calculate the accounting and economic profit for Abner's Apple Art. Item Macmillan Learning Total revenue Costs Apples Utilities Lease Abner's forgone wages Numbers in the table are in thousands What is Abner's Apple Art's accounting profit? What is Abner's Apple Art's economic profit? Amount $220 $30 $20 $20 $70 Accounting profit = $ Economic profit = $ thousand thousandPrinciples of Microeconomics Name: Homework #3 Prof. R. Harris DUE: Wednesday, April 17, 2019 at the beginning of class - NO EXCEPTIONS. Please remember to show all work and please be neat. Please staple this if you print it on your own. 1. Consider the following table of numbers, which represents demand and cost conditions for a com firm. petitive TR 600 0 1 2 $o $400 600 $400 $240 600 $430 $670 $960 $1,350 $1,840 $2,440 $3,120 $3,910 $4,800 600 600 600 600 600 600 5 6 7 600 600 9 10 (a) Fill in the missing values (b) Use the information in the chart to determine what level of output the firm should produce. Explain your reasoning.
- 4. A puppet maker calculates that the yearly cost of running his manufactory is $14,000. Additionally it costs him $60 to create each of his puppets. The price per puppet is determined by the following price-demand equation: p=500–2x a. Find the Cost equation for the total number of puppets produced and sold Find the Revenue equation for the total number of puppets produced and sold b. c. How many puppets does he need to make and sell to break even? d. Use the Cost and Revenue equations to find the Profit function What is the price that he needs to charge if he wants to sell exactly 80 puppets? e.3. Mary Magnolia wants to open a flower shop, the Petal Pusher, in a new mall. She has her choice of three different floor sizes, 200 square feet, 500 square feet, or 1,000 square feet. The monthly rent will be $1 a square foot. Mary estimates that if she has F square feet of floor space and sells y bouquets a month, her variable costs will be c,(y) = y'/2F per month. a. If she has 200 square feet of floor space, write down her marginal cost function and her average cost function. At what amount of output is average cost minimized? At this level of output, how much is average cost? b. If she has 500 square feet, write down her marginal cost function and her average cost function. At what amount of output is average cost minimized? At this level of output, how much is average cost? c. If she has 1,000 square feet of floor space, write down her marginal cost function and her average cost function. At what amount of output is average cost minimized? At this level of output, how much is…Price You are the manager of a firm that charges customers $16 per unit for the first unit purchased, and $12 per unit for each additional unit purchased in excess of one unit. The accompanying graph summarizes your relevant demand and costs. 0 18 16 + 12 10 20 14 8 6 4 2 0 1 2 3 4 Quantity MC-AC D 5 6 7 ernal browser=0&launchUrl=https%253A%252F%252Fnewconnect.mheducation.com%252F#/activity/question-grow a. What is the economic term for your firm's pricing strategy? First degree price discrimination O Fourth degree price discrimination O Third degree price discrimination O Second degree price discrimination Seved b. Determine the profits you earn from this strategy.