What is the break-even price and shut-down price

Reference no: EM13733208

The accompanying table shows a boat manufacturer's total cost of producing boats.

Quantity of Boats	Total Cost
0	$ 450,000
1	$ 490,000
2	$ 510,000
3	$ 520,000
4	$ 540,000
5	$ 570,000
6	$ 610,000
7	$ 670,000
8	$ 750,000
9	$ 870,000

1. What is this manufacturer's fixed cost?

2. For each level of output, calculate the variable cost (VC). For each level of output except zero output, calculate the average variable cost (AVC), average total cost (ATC), and average fixed cost (AFC).

Qty of boats	Total Cost	Variable Costs a.	Average Variable Costs b.	Average Total Costs c.	Average Fixed Cost d.
0	$450,000	-	-	-	-
1	490,000
2	510,000
3	520,000
4	540,000
5	570,000
6	610,000
7	670,000
8	750,000
9	870,000

3. What is the minimum-cost output?

4. Joe Brown's dairy operates in a perfectly competitive marketplace. Joe's machinery costs $500 per day and is the only fixed input. His variable costs are comprised of the wages paid to the few workers he employs at the dairy and the grain he feeds to his dairy cows. His cost structure is shown on the accompanying table

Gallons of Milk	FC	VC	TC	MC	AVC	ATC
0	$500	-	$500	-	-	-
1000	500	$2,100	2,600	$2.10	$2.10	$2.60
2000	500	$2,200	2,700	$0.10	$1.10	$1.35
3000	500	$2,900	3,400	$0.70	$0.97	$1.13
4000	500	$3,680	4,180	$0.78	$0.92	$1.05
5000	500	$5,180	5,680	$1.50	$1.04	$1.14

4. a. What is the break-even price?

4. b. What is the shut-down price?

4. c. If the market price of milk is $1.50 per gallon, will Joe make a profit? Explain.

4. d. If the market price of milk is $1.50 per gallon, should Joe continue to produce in the short run? Explain.

4. e. If the market price of milk is $1.00 per gallon, will Joe make a profit? Explain.

4. f. If the market price of milk is $1.00 per gallon, should Joe continue to produce in the short run? Explain.

4. g. If the market price of milk is $0.75 per gallon, will Joe make a profit? Explain.

4. h. If the market price of milk is $0.75 per gallon, should Joe continue to produce in the short run? Explain.

Reference no: EM13733208

Questions Cloud

The perennial ethical duties to the self-develop : How could the perennial ethical duties to the self-develop our abilities and talents and do ourselves no harm-be mustered to support the idea that these men should be proud of what they do?

Primary individual factors that influence demand : Compare the primary individual factors that influence demand, and explain the significant ways in which each affects the demand curve. Provide at least one (1) example of these factors to support your rationale.

How historically accurate is the film : How historically accurate is the film? If there are inaccuracies, what accounts for them? Is the director simply taking dramatic license in order to keep the story moving?

Provide the owner a detailed plan - fbo profitable : Provide the owner a detailed plan of what you intend to do to make his FBO profitable again. For instance, what specific areas are you going to look at to determine your plan to turn the business around?

What is the break-even price and shut-down price : What is the break-even price and what is the shut-down price and should Joe continue to produce in the short run? Explain.

Inventory management systems : Your sister owns a small clothing store. During a conversation at a family dinner, she mentions her frustration with having to manually track and reorder high demand items. She would like an automated system but has a very small budget.

Discuss the causes of the american war for independence : Discuss the causes of the American war for Independence, 1763 to 1775 Apirl.

Why did so many colonists die at jamestown : Why did so many colonists die at Jamestown? Why did the Salem Witch Trials happen?Who benefited more from the Colombian Exchange?

What costs you would incur : Describe the business and, utilizing the concepts of unit and the earlier units, discuss - what costs you would incur;

User Account

All Pages