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Homework answers / question archive / 1)Baywatch Press is about to publish a book on lifesaving techniques that will sell for $20 The fixed cost of publishing the book is $6000; the average variable cost is $5 per copy
1)Baywatch Press is about to publish a book on lifesaving techniques that will sell for $20 The fixed cost of publishing the book is $6000; the average variable cost is $5 per copy. Compute the book's break-even quantity (i. e, the quantity where total revenue equals total cost).
2)A certain firm is observed to have a U-shaped short-run average total cost curve. Assuming input prices are constant, what economic factor(s) explain the shape of this relationship?
3) Another firm is observed with a U-shaped long-run average total cost curve. Again assuming that input prices are constant what economic factor(s) explain the shape of this relationship?
4)True or False. Anything worth doing is worth doing well. (THINK carefully about your own behavior before answering this question.) Explain your answer to 25.
1. The break-even quantity of the book is 400 units.
2. The short-run total cost level is computed by aggregating the fixed cost (constant) and the total variable cost level. The short-run average total cost curve depicts the relationship between the short-run average cost level and the production quantity level.
3. The long-run total cost level is computed by aggregating the fixed cost and the total variable cost level. The long-run average total cost curve depicts the relationship between the various level minimum short-run average cost level faced by the producer at the production quantity level.
4. The above statement is correct as when the production process is running efficiently (doing well), the producer faces the minimum average total cost level and therefore making the producer more competitive in the market.
