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Chapter 7: Problem 3 on page 162. Chapter 8: Problem 4, a through f, on pages 179-180. Chapter 9: Problem 2 on page 193. Chapter 7 3. You are a...

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Chapter 7: Problem 3 on page 162. Chapter 8: Problem 4, a through f, on pages 179–180. Chapter 9: Problem 2 on page 193. Chapter 7 3. You are a newspaper publisher. You are in the middle of a one-year rental contract for your factory that requires you to pay $500,000 per month, and you have contractual labor obligations of $1 million per month that you can't get out of. You also have a marginal printing cost of $.25 per paper as well as marginal delivery cost of $.10 per paper. If sales fall by 20% from 1 million papers per month to 800,000 papers per month, what happens to the AFC per paper, the MC per paper, and the minimum amount that you must charge to break even on these costs? Chapter 8 4. Assume the following cost data are for a purely competitive producer: Total Product Average fixed cost Average variable cost Average total cost Marginal cost 0 $45 1 $60.00 $45.00 $105.00 40 2 30.00 42.50 72.50 35 3 20.00 40.00 60.00 30 4 15.00 37.50 52.50 35 5 12.00 37.00 49.00 40 6 10.00 37.50 47.50 45 7 8.57 38.57 47.14 55 8 7.50 40.63 48.13 65 9 6.67 43.33 50.00 75 10 6.00 46.50 52.50 a. At a product price of $56, will this firm produce in the short run? If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? What economic profit or loss will the firm realize per unit of output? b. Answer the questions of 4a assuming product price is $41. c. Answer the questions of 4a assuming product price is $32. d. In the table below, complete the short-run supply schedule for the firm (columns 1 and 2) and indicate the profit or loss incurred at each output (column 3). (1) Price (2) Quantity supplied, single firm (3) Profit (+) or loss (l) (4) Quantity supplied, 1500 firms
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$26 $ 32 38 41 46 56 66 e. Now assume there are 1500 identical firms in this competitive industry; that is, there are 1500 firms, each of which has the same cost data shown in the table. Complete the industry supply schedule (column 4). f. Suppose the market demand data for the product are as follows: Price Total quantity demande d $26 17,000 38 15,000 38 13,500 41 12,000 46 10,500 56 9,500 66 8,000
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Economics-7577376.doc

Chapter 7
3. You are a newspaper publisher. You are in the middle of a one-year rental contract for
your factory that requires you to pay $500,000 per month, and you have contractual
labor...

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