Werner & Sons Is a Manufacturer of Three-Ring Binders Operating

question 169

Essay

Werner & Sons is a manufacturer of three-ring binders operating in a perfectly competitive industry.Table 12-5 shows the firm's cost schedule.
Table 12-5

Use the table to answer the following questions.
a. Complete Table 12-5 by filling in the blank cells.
b. Werner is selling in a perfectly competitive market at a price of $40. What is the profit-maximizing or loss-minimizing output?
c. Calculate the firm's profit or loss.
d. Should the firm continue to produce in the short run? Explain.
e. If the firm's fixed costs were $30 higher what would be the profit-maximizing output level in the short run? Indicate whether the output level will increase, decrease, or remain unchanged compared to your answer in b.
f. Suppose fixed cost remains at $76. If the price of three-ring binders falls to $20 what is the profit-maximizing or loss-minimizing output?
g. Calculate the profit or loss. Should the firm continue to produce in the short run? Explain your answer.
h. Suppose the fixed cost remains at $76. What price corresponds to the shut-down point?
i. Suppose the fixed cost remains at $76. What price corresponds to the break-even point?

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Definitions:

NMR Protons

Refers to the hydrogen atoms in a molecule that are detectable by nuclear magnetic resonance spectroscopy, providing information on molecular structure.

α-Carbon

The carbon atom adjacent to the functional group in an organic molecule, particularly significant in amino acids and carbonyl compounds.

Amines

Organic compounds and functional groups that contain a basic nitrogen atom with a lone pair, often classified as primary, secondary, or tertiary.

Base

A substance capable of accepting protons according to the Bronsted-Lowry theory or donating electron pairs in Lewis theory; it counteracts acids.