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- George’s T-Shirt Shop produces 5,000 custom printed T-shirts per month. George’s fixed costs are $15,000 per month. The marginal cost per T-shirt is a constant $4. What is its break-even price? What would be George’s break-even price if he were to sell 50% more shirts?Your niece is deciding whether or not to open a lemonade stand. She expects to sell 20 cups of lemonade for $1 per cup. She already made a sign that cost her $10 and will have $15 worth of additional costs for cups and lemonade mix if she decides to open the stand. If your niece decides to open the lemonade stand, how much profit will she earn? Show how you arrived at this number. Should she open the lemonade stand? What kind of cost is the $10 spent on the lemonade stand sign?Most raisins in the U.S. are produced in California. Raisins come from grapes, in a fairly simple process: grapes grow on vines; at harvest time, workers cut the bunches of grapes down; they spread them out in the sun for a couple of weeks until the grapes shrivel up and become raisins; the raisins are then packed into boxes and sold to consumers. But here’s the thing: California raisin growers have a cartel. And it is a legal cartel, based on a law passed in 1937 during the Great Depression. That law says that raisin growers are exempt from U.S. anti-trust law. So here is what the raisin growers do. They harvest their raisins. Then they have a big meeting of all the growers (called the Raisin Administrative Committee). At this meeting they decide how much of their raisin crop they are actually going to sell. Usually they decide that they will not sell their entire crop – in some years they decide that they will only sell half of it. Whatever they don’t sell goes into storage as a…
- Tim Marlow, the owner of The Clock Works, wanted to know how many clocks he must sell in order to cover his fixed cost at a given price. Tim knew that he had a fixed cost of $20,000 for equipment, taxes, and a bank loan. He also had a unit variable cost of $20 per clock for labor, materials, and promotional costs. If the price Tim charges for each of his clocks is $40, what is his break-even point quantity?Explain the economics in terms of Additive manufacture (AM).Explain why automobile manufacturers produce their own engines but purchase mirrors from independent suppliers.
- what would be its profit-maximizing price? Would that be the efficient level of output? Why or why not?Explain how Coca-Cola, Inc. takes advantage of economies of scope.The marginal cost of supplying another unit of output of an electronic product on the internet is almost zero. If long-run equilibrium has price equals marginal cost, internet firms will all go broke. Can you resolve the puzzle?
- The production manager of a clothing manufacturer estimates that the daily total cost of producing men’s suits is given by the equation: TC=2000+396Q-0.8Q^2. The market price of suits is $300. Which of the following statements is correct? A. Short term, the firm should close because its price is less than its average variable cost. B. Short term, the firm should stay open since price exceeds the average variable cost. C. Short term, the firm should close because it is not earning an economic profit. D. Long term, the firm should stay open since it is earning an economic profitIn 2018, pop star Drake was downloaded twice as often as Cardi B. However, downloads for both these artists sold for the same price on Apple’s iTunes store. Does this suggest that Apple is failing to maximize profits? Use a picture or pictures to answer. You can make a reasonable assumption that the marginal cost to Apple of supplying a download is a constant $0.25.KidzPoses Inc., a profit-maximizing business, is the only photography business in town that specializes in portraits of small children. James, who owns and runs KidzPoses, expects to encounter an average of eight customers per day, each with a reservation price (shown in the following table). Assume James has no fixed costs, and his cost of producing each portrait is $12. Customer Reservation Price ($ per photo) 1 50 2 46 3 42 4 38 5 34 6 30 7…
