Manufacturing Section Production line The production process for Nissan Leaf vehicles is similar to gasoline-fuelled cars, comprising the following steps: 1. Stamping: Steel sheets in coils or blanks arrive and pass thought a quality control. Then they are conformed in presses up to 3000 tons, programmed with the specific dimensions of the parts that form the vehicle. 2. Body Shop: Mounting car body. 3. Painting 4. Assembly: About 3000 pieces are inserted. Only 10% of this process
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ECON3020 EXAM II NAME (PRINT) _______________________________ TRUE/FALSE QUESTIONS (1 POINT EACH) 1. Average total cost is the sum of fixed cost plus variable cost. 2. Other things equal, the larger is the contribution margin the smaller is the breakeven quantity. 3. When the products are standardized, we can be sure that the industry will behave competitively. 4. When free entry exists, the perfect competitive model suggests that economic profit will always be equal to zero. 5. The
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that point it has Excess Capacity . If the management focuses on reserve capacity it will reach the effect of LMC = 0 (marginal cost is decreasing at the increasing rate) . The graph bellow presents SAC ( short ran average cost ) curves for multiple sites and LAC ( long run average cost curve . The graphs shows how the utilization of multiple sites can reduce the LAC at the increasing rate. All plants produce at MES point. C
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Price Discrimination Strategy You own a local sub shop in a college town. You primarily serve two groups of people: local residents (both students and other local residents) and visitors to your town. Devise a price discrimination strategy that will increase your revenues compared to a single-pricing strategy. Price discrimination is common type of pricing strategy used by businesses with flexible pricing power. It is price competition between firms attempting to get an advantage in the market
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a factor that makes it difficult for potential competitors to enter a market. b. the opportunity cost of equity capital that is incurred by a firm producing at minimum total cost. c. the downward-sloping portion of the long-run average total cost curve. d. the declining output experienced as additional units of a variable input are used with a given amount of a fixed input. 2. A monopolist will maximize profits by a. setting the price at the level that will
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Abstract Circuit Business Systems (CBS) began as a computer hardware company in the late 1980s; it has successfully transformed itself into an integrated solutions provider and service provider. A major part of CBS success is directly attributed to its committed use of information technology (IT). IT has not only facilitated its business processes like operations, customer service and employee training but also integrated its information network with that of its clients to provide them with seamless
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current level of output the marginal cost of production is $2.00, average variable costs are $2.75, and average total costs are $2.95. The marginal revenue is $2.75. What would you recommend that the monopolist do to maximize profits? 9. A pure monopolist sells output for $4.00 per unit at the current level of production. At this level of output, the marginal cost is $3.00, average variable costs are $3.75, and average total costs are $4.25. The marginal revenue is $3.00. What is the
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scale of production. The effect is to reduce the long run average costs of production. These lower costs are an improvement in productive efficiency and can benefit consumers in the form of lower prices. But they give a business a competitive advantage too. The firm’s long run average cost shows what is happening to average cost when the firm expands, and is at a tangent to the series of short run average cost curves. Each short run average cost curve relates to a separate stage or phase of expansion
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ANSWERS TO End-of chapter QUESTIONS AND exercises Answers to Questions for Review 1. (Explicit and Implicit Costs) Amos McCoy is currently raising corn on his 100-acre farm and earning an accounting profit of $100 per acre. However, if he raised soybeans, he could earn $200 per acre. Is he currently earning an economic profit? Why or why not? Amos McCoy is not currently making an economic profit, despite the fact that he is making an accounting profit. This is so, because the accounting
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CHAPTER 7 PRODUCTION AND COST IN THE FIRM QUESTIONS FOR REVIEW 1. (Explicit and Implicit Costs) Amos McCoy is currently raising corn on his 100-acre farm and earning an accounting profit of $100 per acre. However, if he raised soy beans, he could earn $200 per acre. Is he currently earning an economic profit? Why or why not? a. No he is not. He could be earning $100 more per acre and gaining that in economic profit. 2. (Explicit and Implicit Costs) Determine whether each of the following
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