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 6, Problem 21PAA
To determine
Issues arising when contracting between international based BPO.
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Suppose the imaginary company of Roobek is a small, Reno-based American apparel manufacturer specializing in athleisure. The following table presents the brand’s total cost of production at several different quantities.
Fill in the remaining cells of the following table.
Quantity
Total Cost
Marginal Cost
Fixed Cost
Variable Cost
Average Variable Cost
Average Total Cost
(Pairs)
(Dollars)
(Dollars)
(Dollars)
(Dollars)
(Dollars per pair)
(Dollars per pair)
0
120
—
—
1
210
2
270
3
315
4
380
5
475
6
630
Suppose the imaginary company of Roobek is a small, Reno-based American apparel manufacturer specializing in athleisure. The following table presents the brand’s total cost of production at several different quantities.
Fill in the remaining cells of the following table.
Quantity
Total Cost
Marginal Cost
Fixed Cost
Variable Cost
Average Variable Cost
Average Total Cost
(Pairs)
(Dollars)
(Dollars)
(Dollars)
(Dollars)
(Dollars per pair)
(Dollars per pair)
0
60
—
—
1
160
2
220
3
270
4
340
5
450
6
630
On the following graph, plot Douglas Fur’s average total cost (ATC) curve using the green points (triangle symbol). Next, plot its average variable cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol). (Hint: For ATC…
Complete the following table (6 points):
Quantity/Output
Total
Fixed Cost
Average Fixed Cost
Total
Variable Cost
Average
Variable Cost
Total Cost
Average
Total Cost
Marginal Cost
(units)
(dollars)
TC=FC+VC
(dollars)
AFC=FC/Q
(dollars)
(dollars)
AVC=VC/Q
(dollars)
TC=FC+VC
(dollars)
ATC-TC/Q=AVC+AFC
(dollars)
MC=DTC/DC
0
$50
$0
$200
10
$50
$20
$70
25
$50
$40
$90
45
$50
$60
$110
60
$50
$80
$130
70
$50
$100
$150
Chapter 6 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
Ch. 6 - Prob. 1CACQCh. 6 - Prob. 2CACQCh. 6 - Prob. 3CACQCh. 6 - Prob. 4CACQCh. 6 - Prob. 5CACQCh. 6 - Prob. 6CACQCh. 6 - Prob. 7CACQCh. 6 - Prob. 8CACQCh. 6 - Prob. 9CACQCh. 6 - Prob. 10CACQ
Ch. 6 - Prob. 11PAACh. 6 - DonutVille caters to its retirement population by...Ch. 6 - Prob. 13PAACh. 6 - Prob. 14PAACh. 6 - Prob. 15PAACh. 6 - Prob. 16PAACh. 6 - Prob. 17PAACh. 6 - Prob. 18PAACh. 6 - Prob. 19PAACh. 6 - Prob. 20PAACh. 6 - Prob. 21PAACh. 6 - Prob. 22PAACh. 6 - Prob. 23PAACh. 6 - Prob. 24PAACh. 6 - Prob. 25PAACh. 6 - Prob. 26PAACh. 6 - Prob. 27PAA
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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. What are Joe's accounting profits? $110,000 $170,000 $65,000 $175,000 $60,000arrow_forwardDouglas Fur is a small manufacturer of fake-fur boots in San Diego. The following table shows the company’s total cost of production at various production quantities. On the following graph, plot Douglas Fur’s average total cost (ATC) curve using the green points (triangle symbol). Next, plot its average variable cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol). (Hint: For ATC and AVC, plot the points on the integer; for example, the ATC of producing one pair of boots is $210, so you should start your ATC curve by placing a green point at (1, 210). For MC, plot the points between the integers: For example, the MC of increasing production from zero to one pair of boots is $90, so you should start your MC curve by placing an orange square at (0.5, 90).) Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.arrow_forwardHomework(Ch 15) 4. Profit maximization and loss minimization BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Suppose that BYOB cannot price discriminate; that is, it sells its beer at the same price per can to all customers. The following graph shows the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) for beer in this market. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for BYOB. If BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if BYOB is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. PRICE (Dollars per can) 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0 MC 0 0.5 ATC 1.5 MR 1.0 2.0 2.5 3.0 QUANTITY (Thousands of cans of beer) 3.5 4.0 + Monopoly Outcome OL Profit Loss a I' narrow_forward
- Use the following data for answering Questions 3-6: The Haverford Company is considering three types of plants to make a particular electronic device. Plant A is much more highly automated than plant B, which in turn is more highly automated than plant C. For each type of plant, average variable cost each type of plant is as follows: constant so long as output is less than capacity, which is the maximum output of the plant. The cost structure for Plant C Plant A Plant B Average Variable Costs $1.10 $2.40 $3.70 Labor 0.90 Materials 1.20 1.80 Other 0.50 2.40 2.00 $2.50 $6.00 $7.50 Total $300,000 $75,000 $25,000 Total fixed costs Annual capacity $50,000 200,000 100,000 Derive the average costs of producing 100,000, 200,000, 300,000, and 400,000 devices per year with Plant C. (NOTE: for output exceeding the capacity of a single plant, assume that more than one plant of this type is built, i.e., all inputs are duplicated in each additional plant. What are the average costs per unit for the…arrow_forwardSuppose that a technological innovation decreases BYOB's costs so that it now faces the marginal cost (MC) and average total cost (ATC) given on the following graph. Specifically, the technological innovation causes a decrease in average fixed costs, thereby lowering the ATC curve and moving the MC curve. Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and quantity for BYOB. If BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if BYOB is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing the loss. 4.00 3.50 Monopoly Outcome 3.00 2.50 Profit 2.00 Loss 1.50 ATC 1.00 0.50 MC MR 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 QUANTITY (Thousands of cans of beer) PRICE (Dollars per unit)arrow_forwardKatie's Quilts is a small retailer of quilts and other bed linen products. Katie currently purchases quilts from a large producer for $150 each and sells them in her store at a price that does not change with the number of quilts that she sells. Katie is considering vertically integrating by making her own quilts. If the fixed cost of vertically integrating is $20,000 and she can produce quilts at $50 per quilt, her total cost of producing quilts, q, herself is C= 20,000 + 50q. How many quilts does Katie need to sell for vertical integration to be a profitable decision? For vertical integration to be profitable, Katie must sell at least quilts. (Enter your response rounded to the nearest whole number.)arrow_forward
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