econs

Project Description:

q1. a manufacturer of electronics products is considering entering the telephone equipment business. it estimates that if it were to begin production, its short run cost function would be as follows:
q (1000) avc ac mc
9​ 41.10 ​52.21 ​30.70
10 ​40.00 ​50.00​ 30.10
11 ​39.10 ​48.19 ​30.10
12 ​38.40 ​46.73 ​30.70
13 ​37.90​ 45.59 ​31.90
14 ​37.60 ​44.74 ​33.70
15 ​37.50​ 44.17 ​36.10
16 ​37.60 ​43.85​ 39.10
17 ​37.90 ​43.78 ​42.70
18 ​38.40 ​43.96 ​46.90
19 ​39.10 ​44.36 ​51.70
20 ​40.00 ​45.00 ​57.10
(a) plot the average variable cost, marginal cost, and price on a graph.
(b) suppose the average wholesale price of this a wireless phone currently $50. do you think this company should enter the market? explain. what is the amount of profit (or loss) earned by the firm at the optimal level of production?
(c) suppose the firm does enter the market and that competition causes the price of the telephones to fall to $35. what impact will this have on the firm's
production levels and profit? explain. what would you advice this firm to do?
q2. the automotive supply company has a small plant that produces speedometers exclusively. its fixed costs are $30,000, and its variable costs ar $10 per unit. it can sell a speedometer for $25.
a. how many speedometers must the company sell to break even?
b. what is the break even revenue?
c. the company sold 3,000 units last year. what was its profit?
d. next years fixed cost are expected to rise to $37,500. what will be the breakeven quantity?
e. if the company will sell the number of units obtained in part d and wants to maintain the same profit as last year, what will the new price be?
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