Module 5_ Homework Assignment.pdf

Table 12 5 quantity cases variable cost total cost

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Table 12-5 Quantity (cases) Variable Cost Total Cost Marginal Cost Average Variable Cost Average Total Cost 0 $0 $76 1 30 106 2 50 3 134 4 140 5 160 6 114 7 150 8 190 9 316 Should the firm continue to produce in the short run? Explain. Yes, the firm should continue to operate because it is earning an economic profit. This means that our price is exceeding out average variable cost allowing us to generate that profit. Explain how it would be possible for the equilibrium price and equilibrium quantity to both increase in the market for motorcycles if consumer preference for motorcycles increases and the number of motorcycle manufacturers decreases. If the consumer preference were to increase, this would cause the demand curve to shift to the right which increases price equilibrium and and equilibrium quantity. Decreasing the number of manufacturers obviously shifts the supply curve left, which increases the equilibrium price. In order for the decrease in manufacturers to result in an equilibrium quantity increase, the consumer preference must be more than the decrease in supply which occurred due to the decrease in manufacturers. If all of the above attributes are present, both situations result in an increase in equilibrium price and equilibrium quantity.
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4/16/2018 Module 5: Homework Assignment 16/16 Question 24 Complete Marked out of 1.00 Question 25 Complete Marked out of 1.00 Discuss the correct and incorrect economic analysis in the following statement. "If good weather in Hawaii creates a bumper crop of pineapples, the supply of pineapples will increase. This will result in a price decrease, which will then cause the supply of pineapples to decrease." The increase in supply will create a higher equilibrium price price and higher equilibrium quantity, but the lower price will not shift the supply curve resulting in a decrease in supply. Why would an organization as large as the National Football League (NFL) incur large legal expenses to try to prevent bars and restaurants from using their trademarked term "Super Bowl" in their advertising? The NFL has spent large amounts of time and money in effort to build a successful brand. When a consumer thinks of the Super Bowl, it is automatically associated with the NFL. If the NFL were to allow bars and restaurants to utilize the trademarked "Super Bowl" term, consumers may be forced into thinking that the company is associated with the NFL even though this could be completely false. In the event that they allow it to happen, and more consumer's jump on board and utilize the trademarked term, before long "Super Bowl" will not cause consumers to automatically think of the NFL, and would potentially damage the brand. Return to: Module 5
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