Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Chapter 1, Problem 23PAA
To determine
To explain:
The advice to be given to the owner of dealership.
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Joe is the owner-operator of Joe's Haircuts Unlimited. Last year he earned $175,000 in total
revenues and paid $110,000 to his employees and suppliers. During the course of the year, he
received three offers to work for other barbers, with the highest offer being $60,000 per
year. Is Joe earning a normal profit?
No, he is earning an above-normal profit.
No, but he is earning an accounting profit and that is all that matters.
Yes, but his economic profit is $0 and that is not good.
We cannot be sure, because "normal" profit is a subjective judgment.
No, his economic profit is negative.
Your local fast-food chain with two dozen
stores uses the company's internal corporate
marketing department to produce signage,
print ads, in-store displays, and so forth.
When placing an order, store managers are
assessed a chargeback (transfer price) of $80
per order that reduces store profitability but
increases marketing department profitability.
Lately, the store managers have been
ordering more and more marketing services;
the marketing department is swamped, and it
cannot afford to hire more staff.
Which of the following dollar figures is a
possible value for the marginal cost per order
of the marketing department? In other words,
which marginal cost per order for the
marketing department would be consistent
with this situation? Check all that apply.
$104.00
$96.00
$72.00
$108.00
Problem 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.
0
Chapter 1 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
Ch. 1 - Prob. 1CACQCh. 1 - What is the maximum amount you would pay for an...Ch. 1 - Prob. 3CACQCh. 1 - Prob. 4CACQCh. 1 - Prob. 5CACQCh. 1 - Prob. 6CACQCh. 1 - Prob. 7CACQCh. 1 - Prob. 8CACQCh. 1 - Prob. 9CACQCh. 1 - Prob. 10CACQ
Ch. 1 - Prob. 11PAACh. 1 - Prob. 12PAACh. 1 - Prob. 13PAACh. 1 - Prob. 14PAACh. 1 - Prob. 15PAACh. 1 - As a marketing manager for one of the worlds...Ch. 1 - Prob. 17PAACh. 1 - Prob. 18PAACh. 1 - Prob. 19PAACh. 1 - Prob. 20PAACh. 1 - Prob. 21PAACh. 1 - Prob. 22PAACh. 1 - Prob. 23PAACh. 1 - Prob. 24PAA
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