(Answered) Dear Students, Based on a combination of this week’s readings, research and observations provide a 200-300 word response to the Questions by clicking on Reply, typing your response, and clicking Post Message.
Respond to the following questions
1. Dear Students, Based on a combination of this week’s readings, research and observations provide a 200-300 word response to the Questions by clicking on Reply, typing your response, and clicking Post Message.
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What marginal costs does University of Phoenix incur in offering one more ECO/561 class? What marginal revenues does University of Phoenix earn from each additional ECO/561 class? How would you expect this marginal analysis to affect the volume of classes University of Phoenix offers? Does University of Phoenix maximize profits?
2. Read: Opportunity Cost.
As a student, what opportunity costs do you confront by enrolling in University of Phoenix's MBA program? Does your organization or an organization with which you are familiar consider opportunity costs when evaluating strategic opportunities?
3. Read: Guillermo Furniture Scenario. And relate it to a company
4. Read: Opportunity Cost. And relate it to a company.
Let's review some important points about the Short Run and Long Run Production Costs.
Fixed, variable and total costs are the short?run classifications of costs; Table 8.2 from chapter 8, your text book illustrates their relationships.
Total fixed costs are those costs whose total does not vary with changes in short?run output.
Please come with some examples of fixed costs!
Total variable costs are those costs that change with the level of output. They include payment for materials, fuel, power, transportation services, most labor, and similar costs.
Total cost is the sum of total fixed and total variable costs at each level of output (see Figure 20.3).
Now, let's look at the average cost. Per unit or average costs are shown in Table 8.2, columns 5 to 7.
1. Average fixed cost is the total fixed cost divided by the level of output (TFC/Q). It will decline as output rises.
2. Average variable cost is the total variable cost divided by the level of output (AVC = TVC/Q).
3. Average total cost is the total cost divided by the level of output (ATC = TC/Q), sometimes called unit cost or per unit cost. Note that ATC also equals AFC + AVC (see Figure 8.4).
Please come with some examples of variable costs!
In the long?run, all production costs are variable, i.e., long-run costs reflect changes in plant size and industry size can be changed (expand or contract).
Figure 8.7, chapter 8 your text book illustrates different short?run cost curves for five different plant sizes.
The long?run ATC curve shows the least per unit cost at which any output can be produced after the firm has had time to make all appropriate adjustments in its plant size.
Economies or diseconomies of scale exist in the long run.
1. Economies of scale or economies of mass production explain the downward sloping part of the long?run ATC curve, i.e. as plant size increases, long-run ATC decrease.
a. Labor and managerial specialization is one reason for this.
b. Ability to purchase and use more efficient capital goods also may explain economies of scale.
c. Other factors may also be involved, such as design, development, or other "start up" costs such as advertising and "learning by doing."
2. Diseconomies of scale may occur if a firm becomes too large as illustrated by the rising part of the long?run ATC curve. For example, if a 10 percent increase in all resources result in a 5 percent increase in output, ATC will increase. Some reasons for this include distant management, worker alienation, and problems with communication and coordination.
3. Constant returns to scale will occur when ATC is constant over a variety of plant sizes.
Come please with examples of economies and diseconomies of scale from real world.
Reference: McConnell, C. R., Brue, S. L., & Flynn, S. M. (2009). Economics: Principles, problems, and policies(18th ed.). Boston, MA: McGraw-Hill Irwin.Ch.8
Any company is looking to produce Economic Profit. Economic Profit is the amount of revenue earned over and above its normal profits. Normal Profit is the minimum return to the factors of production that a firm uses in order to keep-up a certain level of production. In other words all costs, including
implicit costs, have to be covered by a firm's revenue in order for normal profits to be
Based on a famous example of the Whopper's 1$ promotion, what are explicit and implicit costs for Burger King to run this deal? It is very important for us to understand the difference between explicit and implicit costs. What type of costs will be included in calculating Normal (accounting) profit? How would you calculate the Economic Profit for the same product/ service?
Let's have a great discussion here about Pure Competition. To help you better understand that type of market, let's start from reviewing the characteristics of pure competition:
Pure competition entails a large number of firms, standardized product, and easy entry (or exit) by new (or existing) firms.
1. Pure competition is rare in the real world, but the model is important.
a. The model helps analyze industries with characteristics similar to pure competition.
b. The model provides a context in which to apply revenue and cost concepts developed in previous chapters.
c. Pure competition provides a norm or standard against which to compare and evaluate the efficiency of the real world.
2. Many sellers mean that there are enough so that a single seller has no impact on price by its decisions alone.
3. The products in a purely competitive market are homogeneous or standardized; each seller's product is identical to its competitor's in terms of cost.
4. Individual firms must accept the market price; they are price takers and can exert no influence on price.
5. Freedom of entry and exit means that there are no significant obstacles preventing firms from entering or leaving the industry.
After reviewing all listed conditions, in your opinion, Groceries Store industry is a pure competitive market or monopolistic competition? Please share your ideas.
Reference: McConnell, C. R., Brue, S. L., & Flynn, S. M. (2009). Economics: Principles, problems, and policies(18th ed.). Boston, MA: McGraw-Hill Irwin.Ch.9
Submitted on: 2018-01-12 15:11:46
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