Instructions: Proide answers and solve the following questions or exercises usingmaterials presented in the course.23.4The Acme Paper Co lowers its price of envelopes (1,000 count) from S6.00to SS,40, If its sales increase by 20 percent following the price decrease,what is the elasticity coefticient? What will happen to TR (Total Revenue)given this pice decrease? Asa manager, what will be your decisionregarding the proposed price change?
A company that sells consumer electronics products has manufacturingfacilities in Mexico, Taiwan, and Canada. The average hourly wage, output,and annual overhead cost for cach site are as follows:
Item Hourly wage rate Output per person Fixed overhead cost
Mexico SI.50 10 SI50,000
Taiwan S3.00 I8 S90,000
Canada S6.00 A Winery plans to expand to a new production facility. Based on informationprovided by the accounting department, the company estimates fixed costs ofS250,000 per year and average variable costs of20AVC = $10 + $0.01QSI10,000
Given these figures, is the firm currently allocating its productionresources optimally? If not, what should it do? (Note: consideroutput per person as a proxy for marginal product.)
Suppose the fim wants to consolidate all its manufacturing into onefacility. As a manager, where should it be located? Explain.where AVC is the average variable cost (in dollars) and Q is output measuredin cases of output per year:Estimate total cost (TC) and average total cost (ATC) for the coming yearat a projected volume of 4,000 cases.
A profit-maximizing firm in a competitive market is currently producing 100units of output. It has average revenue of SI0, average total cost of S8, andfixed cost of $200.
An increase in worker productivity because of greater experience orlearning during the course of the year resulted in a substantial costsaving for the comnpany. Estimate the effect of learning on theaverage total cost if the actual total cost was $522,500 at an actualvolume of 5,000 cases. As a manager, what will be your decisionregarding the projected expansion to a new production facility?
What is its profit (), marginal cost (MC), and average variable cost(AVC)?
Is the current output of the firm the eficient scale of production(MES)? Is it more or less than 100 units? Explain. As a manager,what will be your decision regarding production scale?
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