Economic Analysis Essay - 851 Words

Tahania Rashid MBA 6008 – Global Economic Environment September 14, 2014 Unit 3 Assignment 1 Chapter 9 - Problem 3, pg. 219 Q: You are a newspaper publisher. You are in the middle of a one- year rental contract for your factory that requires you to pay $ 500,000 per month, and you have contractual labor obligations of $ 1 million per month that you can’t get out of. You also have a marginal printing cost of $ 0.35 per paper as well as a marginal delivery cost of $ 0.10 per paper. If sales fall by 20 percent from 1 million papers per month to 800,000 papers per month, what happens to the AFC per paper, the MC per paper, and the minimum amount that you must charge to break even on these costs? A:†¦show more content†¦Using the MR = MC rule it will produce 8 units. Profits per unit = $7.87 (= $56 - $48.13); total profit = $62.96. b. Answer the questions of 4a assuming product price is $ 41. Yes, $41 exceeds AVC at the loss—minimizing output. Using the MR = MC rule it will produce 6 units. Loss per unit or output is $6.50 (= $41 - $47.50). Total loss = $39 (=Show MoreRelatedArticle Analysis for Economics1636 Words   |  7 PagesUniversity of Phoenix Principles of Microeconomics ECO/365 Professor James Harris III Aug 7, 2008 Article Analysis The article that will be used for this analysis is â€Å"Supply, demand, and the Internet-economic lessons for microeconomic principles courses† by Fred Englander and Ronald L. Moy. There will be definitions for the following economics, microeconomics, Law of supply and the Law of demand. 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