Question 1

​Lemonade anyone? II
Raymond decides to set up a lemonade stand every weekend for the next four weeks to save up for the latest x-men comic.He has to pay his brother Robert $10 as a one time payment for him to not bully Raymond or drive his customers away.The lemons and sugar cost him $10 (the water is free)and his dad offers to set up his stall for him.He ends up making $15 his first weekend.Frank,his father notices this and advises Raymond to shutdown the stall,while Marie his mother advises him not only to set up the stall next weekend but to increase production even more.Raymond is extremely confused.Who do you think he should listen to?

Accepted Answer

The answer of ​Lemonade anyone? II
Raymond decides to set up...

Question 2

​If Marginal Cost (MC)is higher than Average Cost (AC),average cost is

Accepted Answer

If MC is higher than AC, it means that the cost of producing an additional unit is higher than the average cost of producing all units. This indicates that the average cost is increasing, therefore, the best choice is option B, rising.

Question 3

​Lemonade anyone?
Raymond decides to set up a lemonade stand every weekend for the next four weeks to save up for the latest x-men comic.He has to pay his brother Robert $10 as a one-time payment for him to not bully Raymond or drive his customers away.The lemons and sugar cost him $10 (the water is free)and his dad offers to set up his stall for him.He ends up making $15 his first weekend.Frank,his father notices this and advises Raymond to shut down the stall since he is making less than he is spending on the stall.What would you advice Raymond to do?

Accepted Answer

The answer of ​Lemonade anyone?
Raymond decides to set up a...

Question 4

​Group disaster
Mary,Jane,Janet and Samantha chose each other for a group project since they knew that they were all high achievers.Once the project rolled around however,their group actually did more poorly than the group where all the members knew that others were slackers.How did that happen?

Accepted Answer

The answer of ​Group disaster
Mary,Jane,Janet and Samantha chose each other...

Question 5

​If Marginal cost is lower than Average Cost (AC),average cost is

Accepted Answer

If the marginal cost is lower than the average cost, then each additional unit produced is cheaper than the average of all units produced so far. This will cause the average cost to decrease, resulting in a falling average cost curve.

Question 6

​Food Fanatics caters meals where their cost for producing an extra meal is $20.Each of their meals is standard and sells for $25.At this rate what should the company do?

Accepted Answer

Since the cost to produce an extra meal is only $20 and each meal sells for $25, the company should produce more meals in order to increase their profit. By producing and selling more meals, they will be able to take advantage of their low production cost and generate more revenue.

Question 7

Marginal cost typically ________ and marginal revenue typically _________ with increasing output.​

Accepted Answer

Marginal cost refers to the cost of producing an additional unit of output. As output increases, businesses typically need to invest in additional resources or labor, causing the marginal cost to rise. On the other hand, marginal revenue refers to the revenue generated from producing and selling an additional unit of output. As businesses produce more output, they can often benefit from economies of scale and charge a higher price for their goods, causing marginal revenue to fall. Therefore, the correct answer is A) rises; falls.

Question 8

​The main difficulty in applying marginal analysis is

Accepted Answer

Marginal analysis involves examining the additional costs and benefits of a specific decision. Therefore, it is essential to determine which costs and revenues are relevant to that decision. Calculating total cost and average cost are important, but they are not the main difficulty in applying marginal analysis.

Question 9

​Which of the following statements is TRUE?

Accepted Answer

Average cost (AC) is relevant to pricing and financial analysis but not directly to the decision on how much to produce, which is primarily influenced by marginal cost (MC) and marginal revenue.

Question 10

You own a tract of trees and are deciding whether to harvest them now or next year.If you harvest them now,you can invest the proceeds and get a return of 5% on your investment.What should you do?​

Accepted Answer

In this case, it is best to let the trees grow as long as their dollar worth increases by more than 5%. This is because if the increase in their dollar value is more than the return on the investment (5%), it is more profitable to wait and harvest them later. By waiting, the trees will grow bigger and potentially increase in value, allowing for a higher return when eventually sold. However, if the increase in dollar value is less than 5%, it would be better to harvest and invest the proceeds now to get a higher return.

Question 11

What is the Customer Acquisition Cost?​

Accepted Answer

The answer of What is the Customer Acquisition Cost?​
...

Question 12

​Food Fanatics caters meals where their cost of producing an extra meal is $25.Each of their meals is standard and sells for $20.At this rate what should the company do?

Accepted Answer

Producing fewer meals would reduce losses since each meal is sold for $5 less than its production cost.

Question 13

​Cooling systems
Carl is the lead engineer on a smart HVAC cooling system that works with minimal energy and is voice activated.Given the revolutionary nature of the system,it took many failed tries to create a system that actually worked,a cost of $30,000.Now each unit sells for $6500 and it costs $5000 in raw materials and labor to produce.What costs should Carl take into consideration when deciding to service the order for an additional unit?

Accepted Answer

The answer of ​Cooling systems
Carl is the lead engineer on...

Question 14

​Shoe-a-holic
Cathy started her own line of custom made,hand embellished wedding shoes.She opened up her own shop paid $2500 in fixed licensing fee.She used about $3000 in raw materials and made $3500.At the end of the first month,Carly,her sister looked at her financials and told her that she was losing money and should shut down.Cathy is heartbroken.As an economics guru,what would you advise her to do?

Accepted Answer

The answer of ​Shoe-a-holic
Cathy started her own line of custom...

Question 15

A widget producer is deciding whether to compensate widget makers on a salary basis or a per unit basis.Given that it is difficult to monitor shirking,which of these pay schedules would provide stronger performance incentives?​

Accepted Answer

Per piece compensation provides stronger performance incentives because the widget makers are directly incentivized to produce as many widgets as possible in order to increase their earnings. With a salary, widget makers may not feel as motivated to work as efficiently or productively since they will receive the same pay regardless of how much they produce. Additionally, since it is difficult to monitor shirking, per piece compensation allows the management to ensure that the workers are working as hard as possible in order to maximize their earnings.

Question 16

​Cooling systems II
Carl is the lead engineer on a smart HVAC cooling system that works with minimal energy and is voice activated.Given the revolutionary nature of the system,it took many failed tries to create a system that actually worked,a cost of $30,000.Now each unit sells for $6500 and it costs $5000 in raw materials and labor to produce.Carl receives an order for four new units for a customer,but when he takes the order to his manager,the manager is enraged and asks Carl why he wanted to produce something at a loss.What costs would the manager be looking at to come to this conclusion?

Accepted Answer

The answer of ​Cooling systems II
Carl is the lead engineer...

Quiz 3: Extent How Much Decisions

If Marginal Cost (MC) is higher than Average Cost (AC) ,average cost is

Group disaster Mary,Jane,Janet and Samantha chose each other for a group project since they knew that they were all high achievers.Once the project rolled around however,their group actually did more poorly than the group where all the members knew that others were slackers.How did that happen?

If Marginal cost is lower than Average Cost (AC) ,average cost is

Food Fanatics caters meals where their cost for producing an extra meal is $20.Each of their meals is standard and sells for $25.At this rate what should the company do?

Marginal cost typically and marginal revenue typically _ with increasing output.

The main difficulty in applying marginal analysis is

Which of the following statements is TRUE?

You own a tract of trees and are deciding whether to harvest them now or next year.If you harvest them now,you can invest the proceeds and get a return of 5% on your investment.What should you do?

What is the Customer Acquisition Cost?

Food Fanatics caters meals where their cost of producing an extra meal is $25.Each of their meals is standard and sells for $20.At this rate what should the company do?

A widget producer is deciding whether to compensate widget makers on a salary basis or a per unit basis.Given that it is difficult to monitor shirking,which of these pay schedules would provide stronger performance incentives?