Problem In Assignment Case Analysis
Consider the below perfectly competitive firm’s short run cost structures. Is this firm profitable?
Answer: Yes
In the above situation, pick out the number closest to the firm’s output amount?
Answer: 180
In the above situation, pick out the number closest to the firm’s total cost at the optimum production amount?
Answer: 600k
In the above situation, pick out the number closest to the firm’s total revenue at the optimum production amount?
Answer: 900k
In the above situation, pick out the number closest to the firm’s breakeven price?
Answer: 5000
What should Bob do?
The chart below depicts the variable cost for Bob’s Doohickey business. If Bob enters the industry, how many Doohickey’s should he produce to maximize his profits?
Answer: 75
What is the breakeven price for Doohickey’s at Bob’s factory?
Answer: 2826.667
Hard! Bob has $74,000 dollars saved up to be able to fund the operation of his firm if things turn bad. As luck would have it, they do, and the price of Doodads drop to $2,500 per unit. How many years can Bob operate his factory until he runs out of cash?
Answer: 1
In the above situation, how much would Bob’s accounting profit be?
Answer: 50,500
If Bob’s only motivation to make money, should he start producing Doohickeys? Explain your answer!
Answer: He should not start producing Doohickeys because his annual profit from Doohickeys is lower than his annual salary. His annual salary is $60,000 while profit form Doohickeys is $50,500 only.
Does the above answer change if Bob is willing to pay up to $10,000 a year to not have to be around his current co-workers?Explain your answer!
Answer: Yes, the above answer would change because after paying $10,000 his remaining salary will be $50,000 which is lower than the yearly profit of $50,500.
The Doohickey’s market is fickle, prices might drop at any second. What would be the lowest price at which Bob would still operate his Doohickey factory in the short run, once he started production?
Answer: 2792.31
What is the technologically optimum production amount for Bob’s Doohickey factory?….
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