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  • Chapter 6

    Diunggah oleh

    disya
    168 tayangan1 halaman
    Ms. Sharma is considering keeping her duplicating shop open later and hiring additional workers. She estimates that hiring 1 more worker would generate 12 more units of output, 2 workers 22 more units, and so on up to 6 workers generating 42 more units. She should hire 3 workers, as that maximizes her total revenue of $360 per day. The firm is not maximizing output or minimizing costs by hiring the last worker or renting the last machine, as their marginal products are less than their marginal costs. The firm should eliminate the worker or machine with the lowest marginal product that is above its marginal cost. NEPC Airlines should replace its night flight with a morning flight, as that option generates more total revenue. The airline

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    Business Economics

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    Ms. Sharma is considering keeping her duplicating shop open later and hiring additional workers. She estimates that hiring 1 more worker would generate 12 more units of output, 2 workers 22 more units, and so on up to 6 workers generating 42 more units. She should hire 3 workers, as that maximizes her total revenue of $360 per day. The firm is not maximizing output or minimizing costs by hiring the last worker or renting the last machine, as their marginal products are less than their marginal costs. The firm should eliminate the worker or machine with the lowest marginal product that is above its marginal cost. NEPC Airlines should replace its night flight with a morning flight, as that option generates more total revenue. The airline

    Hak Cipta:

    © All Rights Reserved
    Unduh sebagai DOCX, PDF, TXT atau baca online dari Scribd
    Tandai sebagai konten tidak pantas
    168 tayangan1 halaman

    Chapter 6

    Diunggah oleh

    disya
    Ms. Sharma is considering keeping her duplicating shop open later and hiring additional workers. She estimates that hiring 1 more worker would generate 12 more units of output, 2 workers 22 more units, and so on up to 6 workers generating 42 more units. She should hire 3 workers, as that maximizes her total revenue of $360 per day. The firm is not maximizing output or minimizing costs by hiring the last worker or renting the last machine, as their marginal products are less than their marginal costs. The firm should eliminate the worker or machine with the lowest marginal product that is above its marginal cost. NEPC Airlines should replace its night flight with a morning flight, as that option generates more total revenue. The airline

    Hak Cipta:

    © All Rights Reserved
    Unduh sebagai DOCX, PDF, TXT atau baca online dari Scribd
    Tandai sebagai konten tidak pantas
    dari 1

    Chapter 6

    1. Ms. Sharma, the owner and manager of the Fine Duplicating Service located near a major
    university, is contemplating keeping her shop open after 4 PM and until midnight. In order to do
    so, she would have to hire additional workers. She estimates that the additional workers would
    generate the following total output (where each unit of output refers to 100 pages duplicated).
    Workers 0 1 2 3 4 5 6
    Hired
    Total 0 12 22 30 36 40 42
    Product

    a. If the price of each unit of output is $10 and each worker hired must be paid $40 per day,
    how many workers should Ms. Sharma hire?
    b. Find the marginal revenue product of labor for the data above from the change in total
    revenue resulting from the employment of each additional unit of labor, and show that the
    number of workers that Ms. Sharma should hire is the same as that obtained above.
    2. Suppose that the marginal product of the last worker employed by a firm is 40 units of output
    per day and the daily wage that the firm must pay is $20, while the marginal product of the last
    machine rented by the firm is 120 units of output per day and the daily rental price of the
    machine is $30.
    a. Why is this firm not maximizing output or minimizing costs in the long run?
    b. How can the firm maximize output or minimize costs?
    3. NEPC Airlines has an evening flight from Delhi to Chennai with an average of 80 passengers and
    a return flight the next afternoon with an average of 50 passengers. The plane makes no other
    trip. The charge for the plane remaining in Chennai overnight is $1.200 and would be zero in
    Delhi. The airline is contemplating eliminating the night flight out of Delhi and replacing it with a
    morning flight. The estimated number of passengers is 70 in the morning flight and 50 in the
    return afternoon flight. The one-way ticket for any flight is $200. The operating cost of the plane
    are $3.000 per day whether if flies or not.
    a. Should the airline replace its night flight from Delhi with a morning flight?
    b. Should the airline remain in business?
    4. Two firms in the same industry sell their product at $10 per unit, but one firm has TFC = $100
    and AVC = $6 while the other has TFC’ = $300 and AVC’ = 3.33.
    a. Determine the breakeven output of each firm. Why is the breakeven output of the second
    firm larger than that of the first firm?
    b. Find the degree of operating leverage for each firm at Q = 60 and at Q = 70. Why is the
    degree of operating leverage greater at Q = 60 than at Q = 70?

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