A Firm Produces a Good in Two Factories: One in Tucson

question 15

Essay

A firm produces a good in two factories: one in Tucson and one in Phoenix. Historically, the plants' long-run average costs have been comparable. Engineers have found that output elasticity at the Tucson plant is 1.1, while at Phoenix it is .93. A senior production manager has recommended expanding the scale of production in Tucson over the next few years and cutting production in Phoenix. Examine the validity of this proposal.

Analyze the impact of entering and exiting firms on industry profits and economic profits.

Calculate firm profits, losses, and the break-even point in a monopolistically competitive market.

Determine profit-maximizing output levels and prices for firms in monopolistic competition.

Evaluate the role of fixed and variable costs in decision-making for monopolistically competitive firms.

---

Definitions:

Sex

A biological classification based on reproductive organs and chromosomal configurations, typically categorized as male or female.

Gender

The range of characteristics pertaining to, and differentiating between, masculinity and femininity, including social roles, behaviors, and identities.

Racism

Prejudice, discrimination, or antagonism directed against someone of a different race based on the belief that one's own race is superior.

Theory Of Relative Deprivation

The hypothesis that individuals feel deprived and frustrated not due to an absolute lack of something but because they compare their situation unfavorably to others'.