9. micro - short run, and it does not vary due to changes...

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Maya Cohen 066370065 Exercise # 9 1. Marginal cost: Labor input per year Class A Class B Marginal Cost (P/MP) Marginal Cost (P/MP) 1 4.55 6.25 2 7.70 7.14 3 14.29 8.33 4 25 10 5 50 12 6 100 Undefined 7 undefined Undefined 2. Graphs attached. 3. a. The owner would produce and sell until the marginal cost would be higher than the marginal profit. In this case: 5,000< MP. Every Class A field owner would supply: 2,100 units. b. Every Class B owner would supply: 3,000 units. c. 5,100. 4. a. graph attached. b. The output of the company will remain the same, because we have only one factor of production the initial movement of output was 10%, therefore the adjustment made to the price would correct the output in matching. 5. a. A fixed cost in the shoe industry could be generated from shoe making machines, warehouses for storage ext. The fixed cost is for the
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Unformatted text preview: short run, and it does not vary due to changes in output. b. Marginal cost Average variable cost Average total cost Total variable cost Quantity produced MC(x) AVC(X) ATC(X) VC(X) X 30 30 130 30 1 20 50/2= 25 150/2=75 50 2 22 72/3= 24 172/3~ 57.33 72 3 24 96/4= 24 196/4= 49 96 4 29 125/5= 25 225/5= 45 125 5 45 170/6~28.33 270/6= 45 170 6 61 231/7= 33 331/7~47.28 231 7 c. For 20 zuz- 0, 22 zuz- 0, 25 zuz- 4, 30 zuz- 1, 50 zuz- 6, 62 zuz- 7. d. The lowest price is 45. Under that price we are below AVC and we can sustain ourselves for the short run. But in order to pay for the fixed costs as well as the operating costs we need to be above AVC so that the company could make actual profits....
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This note was uploaded on 10/25/2009 for the course BUSINESS 772 taught by Professor Sadeh during the Spring '07 term at Interdisciplinary Center Herzliya.

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9. micro - short run, and it does not vary due to changes...

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