Microeconomics Essay

708 words - 3 pages

1. Sally is considering opening her own beauty salon. She anticipates the following costs/year:

Furniture: | $20,000 |
Equipment: | $14,000 |
Rent: | $12,000 |
Coloring products: | $6,000 |
Styling products: | $4,000 |

Additionally, Sally is withdrawing $34,000 from her savings account that pays 4% interest/year to purchase the furniture and equipment; she will quit her current job that pays $25,000 per year. She expects total revenues from the new business in the first year to be $70,000. Calculate the following:

a. Explicit costs (list the items and amounts).
* Furniture $20,000
* Equipment $14,000
* Rent $12,000
* ...view middle of the document...

What are fixed costs? Cost that are spent and cannot be changed associated with a specific period of time.
b. What are variable costs of producing 5 units? $78
c. What is average total cost of producing 3 units? $14.33
d. What is average fixed cost of producing 4 units? $0
e What is the marginal cost of producing the 2nd unit? $8.00
f. What is average variable cost of producing 1 unit? $15.00

4. Explain why as output in increases, average total cost initially decreases but then increases. Eventually the law of diminishing productivity sets in. As productivity decreases cost rise.
5. State whether the following firms are experiencing economies of scale or diseconomies of scale.

a. West Company can produce 1,500 units at an average total cost of $2.50 or 1,800 units at an average total cost of $2.55. Economies of scale, cost per unit is lower
b. North Company can produce 500,000 units at a total cost of $220,000 or 600,000 units at a total cost of $250,000. Economies of scale
c. Iams can produce 10,000 bags of dog food at a total cost of $150,000. If they increase their production by 7%, total costs will rise by 3%. Economies of scale

6. Given the marginal cost...

Other Essays Like Microeconomics

Microeconomics Essay

892 words - 4 pages Economics 50 Stanford University Abramitzky Fall 2012 Problem Set 9 (due in section Friday, December 7) D 1. An industry faces a demand schedule of the form: Q =475−( 1/3) ·P . Initially, the market is competitive with an industry supply curve of the form: QS =P−25 where P is price, and QD and QS are the quantities demanded and supplied respectively. A. What is the market clearing price and quantity? The industry now becomes

Microeconomics Essay

889 words - 4 pages Name: Danielle Course & Section: BU204 – 02 Unit: 2 Date: September 1st, 2010 Key Terms - Definitions Production Possibility Frontier: “Illustrates the trade-offs facing an economy that produces only two goods. It shows the maximum quantity of one good that can be produced for any given quantity produced of the other.” (Krugman & Wells, 2009, p. 25). To me, a production-possibility frontier, is the graph or chart that shows all


723 words - 3 pages 1. The accompanying table shows the price and yearly quantity sold of ice cream cones on Sidfield Island. Price of Ice Cream Cones Quantity of Ice Cream Cones Demanded $1 3000 $2 2400 $3 1600 $4 800 a. Using the midpoint method (show your work), calculate the price elasticity of demand when the price of an ice cream cone rises from $1 to $2. What does this estimate imply about the price elasticity of demand for ice

The Basics of Microeconomics

1063 words - 5 pages The Basics of Microeconomics Economics dictate every aspect of our lives in the free market world. It is an interesting topic that very few people truly understand. There are two major fields of economics; microeconomics and macroeconomics. It is not always possible to make a distinction between microeconomics and macroeconomics. For example, the difference between conflicting schools of thought in macroeconomics is sometimes

Microeconomics Chapter 1 Questions

701 words - 3 pages Jessica Chuang Professor Wang Principles of Microeconomics Problem Set #1 A. I liked the opening story “Common Ground” of chapter one on page five since it gave me a real life scenario of how economics can affect an individual’s life since many of the common principles of economics can apply to many different issues. For me, I have a difficult time learning things if I can’t find a way for me to apply it to my life or apply it to a

Microeconomics Tax Report

1443 words - 6 pages ECON111 Microeconomics Group Presentation Name | Student ID | Signature | | | | | | | | | | | | | Introduction   For more than a year, the Rudd government has been had a contentious issue with the process of introducing an Emission Trading Scheme (ETS). The Carbon Pollution Reduction Scheme (CPRS) was devised to reduce greenhouse gases and Australia’s carbon pollution (DCC 2009). However, the bills were passed

Bu224 Microeconomics St Atanagio Homework

679 words - 3 pages /economics/revision-notes/as-markets-production-possibility-frontier.html. Grading Rubric Microeconomics: Unit 2 Assignment: PPF and Opportunity Costs | Content | Points Possible | Points Earned | Draw production possibility frontier (PPF) | 3 | | Analyze feasible/infeasible production | 2 | | Compute opportunity cost of increasing annual products | 6 | | Explain the slope of the production possibility frontier | 2 | | Analysis

The Microeconomics of Customer Relationships

1323 words - 6 pages The Microeconomics of Customer Relationships MBA 6008-Global Economic Environment Capella University Theresa Patterson November 27, 2011 Holding on to the customers that are the most profitable is just plain good business. The retaining of current customers is less expensive than acquiring new ones. Current customers represent the path for growth, only if you know how to expand a relationship with them

Microeconomics and the Laws of Supply Demand

588 words - 3 pages Microeconomics and the laws of supply demand ECO/365 Supply and Demand Simulation Since the early years of commerce, supply and demand have been a huge factor in the capitalist business system. For this assignment I was asked to take part in a simulation as a source for my paper. In the simulation I had to take part of a series of important financial decisions for a fictitious apartment management company named GoodLife and see how each

Identify Two Microeconomics and Two Macroeconomics

676 words - 3 pages • Identify two microeconomics and two macroeconomics principles or concepts from the simulation. Explain why you have categorized these principles or concepts as macroeconomic or microeconomic. o Microeconomics Principals: Scenario 1: In one of the first scenarios it talks about decreasing the rent to lower the vacancy percentage and maximize revenue for the company putting the focus on supply and demand. This would be a temporary fix on a

Microeconomics and the Laws of Supply and Demand

830 words - 4 pages Microeconomics and the Laws of Supply and Demand Your NAME ECO/365 July 6, 2015 INSTRUCTOR NAME Microeconomics and the Laws of Supply and Demand The simulation showed how a shift in the supply curve or the demand curve can lead to significant changes to the economic standing of the business. When the demand curve shifts downward or to the left it showed a decrease in demand from renters thus yielding less apartments rented. This

Related Papers

Microeconomics Assignment

567 words - 3 pages works fine for months. He then buys and installs a new piece of software. The next time he starts up his Mac, it freezes. Bill concludes that the software must be the cause of the freeze. b. Joan is scratched by a cat while visiting her friend. Two days later she comes down with a fever. Joan concludes that the cat's scratch must be the cause of her illness. 4. Check your local media for headlines that concern three microeconomics issues

Microeconomics Essay 919 Words

919 words - 4 pages Company XYZ produces bottled water. Internal consultants estimate the company’s production function to be Q = 300L2K, where Q is the number of bottles of water produced each week, L is the hours of labor per week, and K is the number of machine hours per week. Each machine can operate 100 hours a week. Labor costs $20/hour, and each machine costs $1000 per week. Suppose the firm has 20 machines and is producing its current output using an

Microeconomics Essay 1192 Words

1192 words - 5 pages Word count: 1140 Question 1 A. To determine how a competitive market can arrive at price equilibrium, factors incorporating the demand and supply of lamb must be taken into consideration as well as the buying and selling decisions made by households and producers respectively (Jackson, et al, 2011). The lamb market is viewed as a competitive resource market where the demand curve is downward sloping and the supply curve is upward slopping

Microeconomics Essay 2265 Words