Suppose the Local Newspaper Hires Students to Fold and Bag

question 142

Essay

Suppose the local newspaper hires students to fold and bag newspapers for delivery and pays them $20 per shift.Five students can fold and bag 300 newspapers per shift.The fourth student added 50 newspapers to total output.The cost of the capital the firm uses is fixed at $50 per shift.
a.Is the newspaper operating in the long run or short run? Why?
b.What is the average product of 5 students?
c.Calculate the total fixed cost,total variable cost,and total costs of folding and bagging 300 newspapers.
d.Calculate the average fixed cost,average variable cost,and average total costs of folding and bagging 300 newspapers.
e.What is the marginal cost of one of the 50 newspapers folded and bagged by the fourth student?

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Definitions:

Constant Costs

Costs that remain stable in total over a wide range of activity levels but may vary per unit.

Maximizing Profits

Striving to achieve the highest possible profit level by adjusting production levels, pricing strategies, or operational efficiencies.

Total Revenue

The sum of all earnings a company acquires from selling goods or offering services over a specific timeframe.

Total Cost

The sum of fixed costs and variable costs incurred by a firm in the production of a good or service.