Dunder Mifflin is a firm that operates in office paper industry. The industry is perfectly competitive....

 

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Dunder Mifflin is a firm that operates in office paper industry. The industry is perfectly competitive. Dunder Mifflin's short run total cost is equal to TCSR = 288 + 2q + 0.005q² where q is measured in reams of paper sold in a day and total cost is measured in dollars per day. Suppose that 100% of the fixed cost is sunk in the short run. a) In a diagram, draw Dunder Mifflin's MC, AVC, and ATC curves. At what quantity do the MC and ATC curve cross over? Suppose the market price of a ream of paper is $4. b) What is the profit maximizing daily number of reams of paper? c) At a price of $4 per ream, does Dunder Mifflin earn an accounting profit? Does it incur an accounting loss? Illustrate in your diagram. Suppose that 43.75% of the fixed cost is sunk. d) What is the Dunder Mifflin's shut down price? Should the company remain open in the short run or should it shut down? e) In your diagram, highlight Dunder Mifflin's short run supply curve. f) Write the math expression of Dunder Mifflin's supply function. Suppose that Dunder Mifflin can pay L dollars to buy a yearly license for a technology that lowers the daily cost of operations by $1 per unit. If it purchases the license, the firm's total daily cost becomes TC'SR = 288 + L/365 + 9 + 0.005q². g) If it buys the license, how many reams of paper does Dunder Mifflin sell each day? h) What is the highest price L^ Dunder Mifflin is willing to pay for the license? Dunder Mifflin is a firm that operates in office paper industry. The industry is perfectly competitive. Dunder Mifflin's short run total cost is equal to TCSR = 288 + 2q + 0.005q² where q is measured in reams of paper sold in a day and total cost is measured in dollars per day. Suppose that 100% of the fixed cost is sunk in the short run. a) In a diagram, draw Dunder Mifflin's MC, AVC, and ATC curves. At what quantity do the MC and ATC curve cross over? Suppose the market price of a ream of paper is $4. b) What is the profit maximizing daily number of reams of paper? c) At a price of $4 per ream, does Dunder Mifflin earn an accounting profit? Does it incur an accounting loss? Illustrate in your diagram. Suppose that 43.75% of the fixed cost is sunk. d) What is the Dunder Mifflin's shut down price? Should the company remain open in the short run or should it shut down? e) In your diagram, highlight Dunder Mifflin's short run supply curve. f) Write the math expression of Dunder Mifflin's supply function. Suppose that Dunder Mifflin can pay L dollars to buy a yearly license for a technology that lowers the daily cost of operations by $1 per unit. If it purchases the license, the firm's total daily cost becomes TC'SR = 288 + L/365 + 9 + 0.005q². g) If it buys the license, how many reams of paper does Dunder Mifflin sell each day? h) What is the highest price L^ Dunder Mifflin is willing to pay for the license?

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a In the short run Dunder Mifflins Marginal Cost MC curve is given by the first derivative of the Total Cost function TCSR with respect to q MC dTCSRdq 2 001q The Average Variable Cost AVC curve is gi... View the full answer