Case Study Eco 202 M1 Spring 2022 Academic Calendar

Case Study Eco 202 M1 Spring 202022 1the Academic Calendar For A Un

CASE STUDY ECO 202-M1- Spring . The academic calendar for a university is August 15 through May 15. A professor commits to a contract that binds her to a teaching position at this university for this period. Based on this information, explain the short run and long run that the professor faces.

The short-run production function for a manufacturer of flash memory drives is shown in the table below. Based on this information, answer the following questions. Input of Labor (workers per week) Total Output of Flash Memory Drives a. Calculate the average product at each quantity of labor. b. Calculate the marginal product of labor at each quantity of labor. c. At what point does marginal product begin to diminish?

At its current short-run level of production, a firm’s average variable costs equal $20 per unit, and its average fixed costs equal $30 per unit. Its total costs at this production level equal $2,500. a. What is the firm’s current output level? b. What are its total variable costs at this output level? c. What are its total fixed costs?

In the short run, a firm’s total costs of producing 100 units of output equal $10,000. If it produces one more unit, its total costs will increase to $10,150. a. What is the marginal cost of producing 101 instead of 100 units of output? b. What is the firm’s average total cost of producing 100 units? c. What is the firm’s average total cost of producing 101 units?

Yesterday, a perfectly competitive producer of construction bricks manufactured and sold 10,000 bricks per week at a market price that was just equal to the minimum average variable cost of producing each brick. Today, all the firm’s costs are the same, but the market price of bricks has declined. a. Assuming that this firm has positive fixed costs, did the firm earn economic profits, economic losses, or zero economic profits yesterday? b. To maximize economic profits today, how many bricks should this firm produce today?

Explain why each of the following examples is not a perfectly competitive industry. a. One firm produces a large portion of the industry’s total output, but there are many firms in the industry, and their products are indistinguishable. Firms can easily exit and enter the industry. b. There are many buyers and sellers in the industry. Consumers have equal information about the prices of firms’ products, which differ moderately in quality from firm to firm. c. Many taxicabs compete in a city. The city’s government requires all taxicabs to provide identical service. Taxicabs are nearly identical, and all drivers must wear a designated uniform. The government also enforces a binding limit on the number of taxicab companies that can operate within the city’s boundaries.

A manager of a monopoly firm notices that the firm is producing output at a rate at which average total cost is falling but is not at its minimum feasible point. The manager argues that surely the firm must not be maximizing its economic profits. Is this argument correct?

Use the following graph to answer the questions that follow. a. What is the monopolist’s profit-maximizing output? b. At the profit-maximizing output rate, what are average total cost and average revenue? c. At the profit-maximizing output rate, what are the monopolist’s total cost and total revenue? d. What is the maximum profit? e. Suppose that the marginal cost and average total cost curves in the diagram also illustrate the horizontal summation of the firms in a perfectly competitive industry in the long run. What would the equilibrium price and output be if the market were perfectly competitive? Explain the economic cost to society of allowing a monopoly to exist.

A monopolist’s maximized rate of economic profits is $5,000 per week. Its weekly output is 500 units, and at this output rate, the firm’s marginal cost is $15 per unit. The price at which it sells each unit is $40 per unit. At these profit and output rates, what are the firm’s average total cost and marginal revenue?

Currently, a monopolist’s profit-maximizing output is 200 units per week. It sells its output at a price of $60 per unit and collects $30 per unit in revenues from the sale of the last unit produced each week. The firm’s total costs each week are $9,000. Given this information, what are the firm’s maximized weekly economic profits and its marginal cost?

Consider the diagram below depicting the demand and cost conditions faced by a monopolistically competitive firm. a. What are the total revenues, total costs, and economic profits experienced by this firm? b. Is this firm more likely in short- or long-run equilibrium? Explain.

A firm that sells e-books—books in digital form downloadable from the Internet—sells all e-books relating to do-it-yourself topics (home plumbing, gardening, and the like) at the same price. At present, the company can earn a maximum annual profit of $25,000 when it sells 10,000 copies within a year’s time. The firm incurs a 50-cent expense each time a consumer downloads a copy, but the company must spend $100,000 per year developing new editions of the e-books. The company has determined that it would earn zero economic profits if price were equal to average total cost, and in this case it could sell 20,000 copies. Under marginal cost pricing, it could sell 100,000 copies. a. In the short run, what is the profit-maximizing price of e-books relating to do-it-yourself topics? b. At the profit-maximizing quantity, what is the average total cost of producing e-books?

The table below shows recent worldwide market shares of producers of inkjet printers. Firm Share of Worldwide Market Sales Brother 3% Canon 17 Dell 6 Epson 18 Hewlett-Packard 41 Lexmark 13 Samsung 1 Other 1 a. In this year, what was the four-firm concentration ratio in the inkjet-printer industry? b. In this year, what was the seven-firm concentration ratio in the inkjet-printer industry?

Paper For Above instruction

The assignment explores various concepts in microeconomics, including the distinctions between short-term and long-term decision-making for firms and individuals, analyses of production functions, cost structures, market competition frameworks, and the implications of monopoly and monopolistic competition on economic efficiency and societal welfare.

Short-term and Long-term Perspectives of a University Professor

The university academic calendar from August 15 to May 15 frames the teaching period within a clearly defined academic year. For the professor, the short-run perspective encompasses the immediate period of her current employment contract, which may include her ongoing teaching responsibilities, limited resource adjustments, and fixed contractual commitments. During this short period, she cannot alter the length of her employment or significantly modify institutional policies. Conversely, the long-run perspective involves the entire academic cycle and potential future career considerations. Over this extended horizon, the professor can evaluate possibilities such as contract renewal, sabbaticals, changes in employment terms, or transitioning to different institutions or careers. The short run is characterized by fixed factors, primarily her current employment contract, while the long run offers flexibility and strategic planning, including negotiations and career planning.

Analysis of the Flash Memory Drive Manufacturing Production Function

In analyzing the short-run production function, the key metrics include average product (AP) and marginal product (MP). The AP at each level of labor is computed as total output divided by the number of workers, illustrating productivity per worker. The MP, on the other hand, measures the additional output generated by employing one more worker, indicating the incremental benefit of increasing input. The point at which MP begins to diminish is particularly significant because it signals diminishing returns, typically associated with the law of diminishing marginal returns. This point marks where adding more labor results in smaller increases in output, informing decisions about optimal labor employment levels to maximize efficiency.

Cost Structures and Profit Maximization in Short Run

For a firm with average variable costs (AVC) of $20 and average fixed costs (AFC) of $30 at a specific output, total costs comprise both fixed and variable components, totaling $2,500. The total variable costs (TVC) are derived from AVC multiplied by the quantity of output, while fixed costs (TFC) are obtained by multiplying AFC by the quantity. In particular, if we compute the output level, the cost details determine the firm’s efficiency and profitability. Similarly, analyzing marginal costs (MC) and average total costs (ATC) at different levels of production helps understand the firm’s cost behavior, optimizing output where MC intersects ATC at its minimum.

Market Structures and Competitive Dynamics

The conditions under which a firm operates—whether perfect competition or monopoly—substantially influence its pricing and output decisions. For instance, a firm producing bricks at a point where price equals the minimum average variable cost indicates zero economic profit, a hallmark of long-run equilibrium in perfect competition. When market prices decline, firms with positive fixed costs may face losses and decide whether to continue production or exit the market. Conversely, monopolists set prices where marginal revenue equals marginal cost, maximizing profits but often causing societal welfare losses due to higher prices and lower output compared to competitive markets.

Market Concentration and Industry Structure

The level of market concentration, as measured by metrics such as the four-firm and seven-firm concentration ratios, reflects the degree of competition within an industry. High concentration ratios indicate dominance by a few firms, which can lead to reduced competition and potential market power abuse. For example, in the inkjet printer industry, the data suggests significant market share concentration, which affects pricing strategies and innovation.

Implications of Monopoly on Society

Allowing monopolies to persist results in allocative inefficiency, as monopolists restrict output to charge higher prices relative to marginal costs. This leads to deadweight loss, where potential gains from trade are not realized, and consumers face higher prices and reduced choices. Societally, this translates to a misallocation of resources, lower consumer surplus, and less overall welfare, emphasizing the importance of regulatory frameworks and competitive policies to mitigate these distortions.

Conclusion

The comprehensive analysis of these microeconomic topics illustrates the importance of understanding firm behavior, market dynamics, and the broader societal impacts. Both short-term decision-making and long-term strategies are vital for firms seeking to optimize performance and sustainability. Additionally, awareness of market structures guides policymakers in designing interventions that promote economic efficiency and consumer welfare.

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