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:

Mortgage-Backed Security Tranches

Portions of a mortgage-backed security segregated by risk, payment timing, or other characteristics to suit different investors.

Default Risk Exposure

The likelihood that a borrower will be unable to make required payments on their debt obligations.

Investment

The allocation of resources, usually money, with the expectation of generating an income or profit.

Convertible Bonds

Bonds that can be converted into a predetermined number of the issuing company's shares at certain times during the bond's life, usually at the discretion of the bondholder.