You are a newspaper publisher. You are in the middle of a oneyear rental contract for your factory that requires you to pay $500,000 per month, and you have contractual labor obligations of $1 million per month that you can’t get out of. You also have a marginal printing cost of $0.25 per paper as well as a marginal delivery cost of $0.10 per paper. If sales fall by 20 percent from 1 million papers per month to 800,000 papers per month, what happens to the AFC per paper, the MC per paper, and the minimum amount that you must charge to break even on these costs?

You are a newspaper publisher. You are in the middle of a oneyear rental contract for your factory that requires you to pay $500,000 per month, and you have contractual labor obligations of $1 million per month that you can’t get out of. You also have a marginal printing cost of $0.25 per paper as well as a marginal delivery cost of $0.10 per paper. If sales fall by 20 percent from 1 million papers per month to 800,000 papers per month, what happens to the AFC per paper, the MC per paper, and the minimum amount that you must charge to break even on these costs?

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter7: Production, Inputs, And Cost: Building Blocks For Supply Analysis

Section: Chapter Questions

Problem 9TY

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Let's explore how rising costs helped to kill off most printed newspapers after the Internet became available in the mid-1990s. Imagine that you are a newspaper publisher in the year 2004. You are in the middle of a one-year factory rental contract that requires you to pay $700,000 per month, and you have contractual salary obligations of $1,250,000 per month that you can't get out of. You also have a marginal printing cost of $0.35 per paper as well as a marginal delivery cost of $0.10 per paper. Instructions: Enter your answers rounded to two decimal places. a. If sales fall by 20 percent from 1,000,000 newspapers per month to 800,000 newspapers per month, what happens to the AFC per newspaper? AFC per newspaper (Click to select) : from $ b. What happens to the MC per newspaper? MC per newspaper (Click to select) ÷ c. What happens to the minimum amount that you must charge to break even? It (Click to select) : from $ to $
You are a newspaper publisher. You are in the middle of a one-year rental contract for your factory that requires you to pay $600,000 per month, and you have contractual labor obligations of $1,250,000 per month that you can’t get out of. You also have a marginal printing cost of $0.35 per paper as well as a marginal delivery cost of $0.10 per paper. Instructions: Round your answers to 2 decimal places. c. What happens to the minimum amount that you must charge to break even on these costs? It increases from $...........per paper to $2.76. what is the price for paper?
You are a newspaper publisher. You are in the middle of a one-year factory rental contract that requires you to pay $500,000 per month, and you have contractual salary obligations of $1,250,000 per month that you can't get out of. You also have a marginal printing cost of $0.25 per paper as well as a marginal delivery cost of $0.10 per paper. Instructions: Enter your answers rounded to two decimal places. a. If sales fall by 20 percent from 1,000,000 newspapers per month to 800,000 newspapers per month, what happens to the AFC per newspaper? AFC per newspaper (Click to select) v from $ to $ b. What happens to the MC per newspaper? MC per newspaper (Click to select) v c. What happens to the minimum amount that you must charge to break even? It (Click to select) v from $ to $
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Joe quits his computer programming job, where he was earning a salary of $70,000 per year, to start his own computer software business in a building that he owns and was previously renting out for $20,000 per year. In his first year of business he has the following expenses: salary paid to himself, $45,000; rent, $0; and other expenses, $40,000. Find the accounting cost and the economic cost associated with Joe's computer software business. (Enter numeric responses using an integer.) The accounting cost of Joe's business is $ (Enter your response as an integer.) es Get more help Clear all Check answer
Your company operates with a technology that is characterized by a diminishing rate of technical substitution of labor for capital. Your firm is currently producing 64 units of output using 8 units of capital and 10 units of labor. At that operating point the marginal product of labor is 8 and the marginal product of capital is 4. The rental price of a unit capital is $4 and the wage rate is $2 Is your firm minimizing the total long-run cost of producing the 64 units of output? If so, how do you know? If not, show why not and indicate whether the firm should be using more capital and less labor, or less capital and more labor to produce an output of 64.
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