Chapter 11. Chapter 11

Step 1

Work It Out
Chapter 11
true
true
You must read each slide, and complete any questions on the slide, in sequence.

Question

Suppose Margie decides to lease a photocopier and open up a black-and-white photocopying service in her dorm room for use by faculty and students. Her total cost, as a function of the number of copies she produces per month, is given in the table:

A table with eight rows and six columns. The column headers are Number of Photocopies per month, Total cost is equal to the sum of FC and VC, Fixed cost (FC), variable cost (VC), total revenue (TR is equal to the product of P and Q), and Profit is equal to the difference between TR and TC. The values in the second row are 0 in the first column and 100 dollars in the second column. The values in the third row are 1000 in the first column and 110 dollars in the second column. The values in the fourth row are 2000 in the first column and 125 dollars in the second column. The values in the fifth row are 3000 in the first column and 145 dollars in the second column. The values in the sixth row are 4000 in the first column and 175 dollars in the second column. The values in the seventh row are 5000 in the first column and 215 dollars in the second column. The values in the eighth row are 6000 in the first column and 285 dollars in the second column. There is no data in the other cells.
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
3:04

Step 2

Question

H33xXB97mNYmKW+oGWczJYR1G6Pfpj4B5RFUTUYhnXwOeIZmCNCJBwJLL0WvdGsGX3CfZgXGvf5bKCRA0kXmGYqAEPdBMDcXT42tvUEPhFAcGnrJZXrZX09nZAZhicv9cXI6Y848uB0E84J9T+8I39nJgVJb56pXDEIrv/5IPjYru6Owvc+xTif/hte1plHsG5eAH0V8hn6Q+Gps6YXaBNNtyBJShVo4J4dB4xc1fWnSqisVZ0net0xNnJn/85VcxtCLYgH77/Ih9cDcW0nMMw==
Correct! If Margie sells 5,000 photocopies per month, then we can see from the table that she will earn the highest profit of $85. Alternatively, profit increases from additional sales whenever MR > MC. This occurs up to 5,000 photocopies per month. When 6,000 photocopies per month are produced MR < MC so profit would decrease.

A table with eight rows and nine columns. The column headers are Number of Photocopies per month, Total cost is equal to the sum of FC and VC, Fixed cost (FC), variable cost (VC), total revenue (TR is equal to the product of P and Q), Profit is equal to the difference between TR and TC, MC is equal to the ratio of delta TC to delta Q, MR is equal to the ratio of delta TR to delta Q, and Change in profit is equal to the difference between MR and MC. The values in the second row are 0, 100 dollars, 100 dollars, 200 dollars, 0 dollars, minus 100 dollars in the first through sixth columns. The values in the third row are 1000, 110 dollars, 100 dollars, 210 dollars, 60 dollars, minus 50 dollars, 1 cent, 6 cents, 5 cents. The values in the fourth row are 2000, 125 dollars, 100 dollars, 225 dollars, 120 dollars, minus 5 dollars, 2 cents, 6 cents, 5 cents. The values in the fifth row are 3000, 145 dollars, 100 dollars, 245 dollars, 180 dollars, 35 dollars, 2 cents, 6 cents, 4 cents. The values in the sixth row are 4000, 175 dollars, 100 dollars, 275 dollars, 240 dollars, 65 dollars, 3 cents, 6 cents, 3 cents. The values in the seventh row are 5000, 215 dollars, 100 dollars, 315 dollars, 300 dollars, 85 dollars, 4 cents, 6 cents, 2 cents. This row is highlighted in yellow. The values in the eighth row are 6000, 285 dollars, 100 dollars, 385 dollars, 360 dollars, 75 dollars, 7 cents, 6 cents, minus 1 cent.
Sorry! Margie wants to make as much profit as possible so how many photocopies per month should she make? To review how to determine the level of output that will maximize profit, please see the section “What Quantity to Produce?”
2:33

Step 3

Question

EI8381N+mfjhWW5xYCJCfbJKu3T5ihfFwxYhyjJV/r5hzO7e6O40785CmuGM1dQKpgE+24zcUMWKcHkHRZ8c2m50KB4YxMt8kz8LucLXINMTY44Uce51RkkUqsnacoJ0s1iFIc+Y1O/u+fgfxr+/hEiOnVbuWP3cMpMh0CBHTnoq4Em/glfe+zTwdJsEQzmuOpV22ZSgapBqiMvJ+Qv0gYesw0QcfNFLjtXtrFng8/PQt4/Rj9JfYb+Wt+Gajy7LIeHMMV58FKZBsaDS3dTreCwcFDxawRKtWzGv/BCl+H3OTMzNMdFx5HhbAebaDBWkosSJPH+gfZK5NxNVbD7DbrCKxFvaIoWA6ASLGfOz5sH2L16wP65xt1WbA4+1Wtim
Correct! If Margie sells 5,000 photocopies per month, then we can see from the table that she will earn the highest profit of $85. The amount needed to maximize profits does not change with the higher lease rate since the lease rate is a fixed cost in this situation. Changes in fixed cost do not change marginal cost so the profit maximizing quantity does not change.
Sorry! Margie wants to make as much profit as possible so how many photocopies per month should she make? What type of cost is the lease rate in this situation? To review how to determine the level of output that will maximize profit, please see the section “Entry, Exit, and Shutdown Decisions.”

Step 4

Question

The $50 increase in the lease rate would aFjhaGnPMOJN7uwXzP8UIBTrxikCBRZ24QBZV25+i7I= Margie’s profit.

Correct! Even though Margie still makes 5,000 photocopies per month, the $50 is an increase in fixed cost and will reduce her profits by that amount at every output level. Instead of the $85 in profit made before the lease rate increase, Margie now makes $35. This can be seen in the table below.

A table with eight rows and six columns. The column headers are Number of Photocopies per month, Total cost is equal to the sum of FC and VC, Fixed cost (FC), variable cost (VC), total revenue (TR is equal to the product of P and Q), and Profit is equal to the difference between TR and TC. The values in the second row are 0, 150 dollars, 150 dollars, 0 dollars, 0 dollars, minus 150 dollars. The values in the third row are 1000, 160 dollars, 150 dollars, 10 dollars, 60 dollars, minus 100 dollars. The values in the fourth row are 2000, 175 dollars, 150 dollars, 25 dollars, 120 dollars, minus 55 dollars. The values in the fifth row are 3000, 195 dollars, 150 dollars, 45 dollars, 180 dollars, minus 15 dollars. The values in the sixth row are 4000, 225 dollars, 150 dollars, 75 dollars, 240 dollars, 15 dollars. The values in the seventh row are 5000, 265 dollars, 150 dollars, 115 dollars, 300 dollars, 35 dollars. This row is highlighted in yellow. The values in the eighth row are 6000, 335 dollars, 150 dollars, 185 dollars, 360 dollars, 25 dollars.
Sorry! Margie’s profit maximizing output level may not change, but what about her profit level? Consider recalculating the original table with the higher $50 lease rate. To review how to determine the impact on profits, please see the section “Entry, Exit, and Shutdown Decisions.”

Step 5

Question

When it is time to renew her lease, Margie WmPBBK09qFtm5InqOD3ZiVTpgDs05ibAXiyJHL28Ioa9mYk8lHcX6yn+WYWVOazG61W1Ji+nUV6IN+bGV01yQcCET6rbbC+hGBE/Di63djovX5OWCfedF963y4zsHtwDxntvhSMwF3i0j5ROMdZaaasHQHhdHurnrwAw2VwtSc2Ho2tvIvZHERPX7lQCUiTCquV+LX7gzlDNl0CNvF2x7FVY9pAGK6TSvPWaPYSL6G7aWsX0+3uEbSOylcRkAUp3bDGDDDzDEgbPcHAqibrnODowbFhQYD1sQy97c3khQyE6If5TByjxiNHWCfCfkhT9nNhU0/sRxpBCpoK4c9b5fsjj9xf713Qm/DfMvVoIi545TEXs2ayftCXpVJ8=

Correct! The higher $50 lease rate resulted in a lower profit of $35, but since this profit is greater than zero, it is considered an above normal profit. Firms will only exit the market when they earn a loss.
Sorry! When will a firm decide to exit an industry? Please see thesection “Entry, Exit, and Shutdown Decisions.”