PRODUCTION, COST, & PERFECT COMPETITION - 77685

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lboogie29154

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  • From: Economics, Microeconomics
  • Due on: Sat 05 Sep, 2015 (06:39am)
  • Asked on: Wed 26 Aug, 2015
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Description

A firm currently uses 40,000 workers to produce 180,000 units of output per day. The daily wage per worker is $100, and the price of the firm's output is $28. The cost of other variable inputs is $500,000 per day. (Note: Assume that output is constant at the level of 180,000 units per day.)

Assume that total fixed cost equals $1,200,000. Calculate the values for the following four formulas:

  • Total Variable Cost = (Number of Workers x Worker’s Daily Wage) + Other Variable Costs
  • Total Costs = Total Variable Costs + Total Fixed Costs
  • Total Revenue = Price * Quantity
  • Average Variable Cost = Total Variable Cost / Units of Output per Day
  • Average Total Cost = (Total Variable Cost + Total Fixed Cost) / Units of Output per Day

    Complete the following:

  • Calculate the firm’s profit or loss. Is the firm making a profit or a loss?
  • Explain the Short Run Shut Down Rule. Should this firm shut down? Please explain.
  • Provide a report to the management of the firm that discusses what should be done.

    Be sure to show your work to support the decision that you outline in your report.

     

 

3 Solution for PRODUCTION, COST, & PERFECT COMPETITION
Title Price Category solution By purchased  
Financial Status of Firm
$5.00 Economics, Microeconomics Teach 0 time(s)
Finances Within a Firm
$10.00 Economics, Microeconomics Lewin 0 time(s)
Finances of the Firm
$8.00 Economics, Macroeconomics RNguyen99 0 time(s)
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