Werner & Sons is a manufacturer of three-ring binders operating in a perfectly competitive industry. Table 8-5 shows the firm's cost schedule.
Table 8-5
Use the table to answer the following questions.
a. Complete Table 8-5 by filling in the blank cells.
b. Werner is selling in a perfectly competitive market at a price of $40. What is the profit maximising or loss-minimising output?
c. Calculate the firm's profit or loss.
d. Should the firm continue to produce in the short run? Explain.
e. If the firm's fixed costs were $30 higher, what would be the profit-maximising output level in the short run? Indicate whether the output level will increase, decrease or remain unchanged compared to your answer in b.
f. Suppose fixed cost remains at $76. If the price of three-ring binders falls to $20 what is the profit-maximising or loss-minimising output?
g. Calculate the profit or loss. Should the firm continue to produce in the short run? Explain your answer.
h. Suppose the fixed cost remains at $76. What price corresponds to the shut-down point?
i. Suppose the fixed cost remains at $76. What price corresponds to the break-even point?

Question

Werner & Sons is a manufacturer of three-ring binders operating in a perfectly competitive industry. Table 8-5 shows the firm's cost schedule.
Table 8-5
  Use the table to answer the following questions.
a. Complete Table 8-5 by filling in the blank cells.
b. Werner is selling in a perfectly competitive market at a price of $40. What is the profit maximising or loss-minimising output?
c. Calculate the firm's profit or loss.
d. Should the firm continue to produce in the short run? Explain.
e. If the firm's fixed costs were $30 higher, what would be the profit-maximising output level in the short run? Indicate whether the output level will increase, decrease or remain unchanged compared to your answer in b.
f. Suppose fixed cost remains at $76. If the price of three-ring binders falls to $20 what is the profit-maximising or loss-minimising output?
g. Calculate the profit or loss. Should the firm continue to produce in the short run? Explain your answer.
h. Suppose the fixed cost remains at $76. What price corresponds to the shut-down point?
i. Suppose the fixed cost remains at $76. What price corresponds to the break-even point?

Quizplus · Accepted Answer

The Answer of Werner & Sons is a manufacturer of three-ring binders operating in a perfectly competitive industry. Table 8-5 shows the firm's cost schedule.
Table 8-5
  Use the table to answer the following questions.
a. Complete Table 8-5 by filling in the blank cells.
b. Werner is selling in a perfectly competitive market at a price of $40. What is the profit maximising or loss-minimising output?
c. Calculate the firm's profit or loss.
d. Should the firm continue to produce in the short run? Explain.
e. If the firm's fixed costs were $30 higher, what would be the profit-maximising output level in the short run? Indicate whether the output level will increase, decrease or remain unchanged compared to your answer in b.
f. Suppose fixed cost remains at $76. If the price of three-ring binders falls to $20 what is the profit-maximising or loss-minimising output?
g. Calculate the profit or loss. Should the firm continue to produce in the short run? Explain your answer.
h. Suppose the fixed cost remains at $76. What price corresponds to the shut-down point?
i. Suppose the fixed cost remains at $76. What price corresponds to the break-even point?

Werner & Sons Is a Manufacturer of Three-Ring Binders Operating