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

question 50

Essay

Werner & Sons is a manufacturer of three-ring binders operating in a perfectly competitive industry.Table 12-4 shows the firm's cost schedule.
Table 12-4
-Use the table to answer the following questions.
A.Complete Table 12-4 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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