Chapter 22: Q.1 - For Critical Thinking (page 505)
In your view, is a retailing firm's shrink likely to contribute most to its fixed costs or variable costs? Explain your reasoning.
a retailing firm's shrink likely to contribute most to its variable costs
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If Tesla were to produce only a few dozen home batteries per month, would the company experience economies of scale or diseconomies of scale? Explain.
If long-run average costs decrease at each possible quantity, does the minimum efficient scale necessarily either increase or decrease? Explain your reasoning.
During the past year, a firm produced laptop computers. Its total costs were million, and its fixed costs were million. What are the average variable costs of this firm?
In an effort to reduce their total costs, many companies are now replacing paychecks with payroll cards, which are stored-value cards onto which the companies can download employees' wages and salaries electronically. If the only factor of production that a company varies in the short run is the number of hours worked by people already on its payroll, would shifting from paychecks to payroll cards reduce the firm's total fixed costs or its total variable costs? Explain your answer.
Suppose that a firm's only variable input is labor. The firm increases the number of employees from four to five, thereby causing weekly output to rise by two units and total costs to increase from per week to per week.
a. What is the marginal product of hiring five workers instead of four?
b. What is the weekly wage rate earned by the fifth worker?
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