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Softa [21]
3 years ago
5

A firm sells a product in a purely competitive market. The marginal cost of the product at the current output of 200 units is $4

.00. The average variable cost is $3.50. The market price of the product is $3.00. To maximize profits or minimize losses, the firm shouldA. Continue to produce 500 units
B. Produce less than 500 units
C. Produce more than 500 units
D. Shut down
Business
1 answer:
posledela3 years ago
7 0

Answer:

D. Should Shut Down

Explanation:

A perfect competition firm is at profit maximising equilibrium where : Marginal Revenue [Price] = Marginal Cost .

If MR > MC : Firm's additional production is profitable, it tends to increase production. If MR < MC : Firm's additional production is loss making, it tends to decrease production.

However, If firm's Price i.e MR < Average Variable Cost : The firm's per unit price is even unable to cover it's per unit average variable cost. This situation is referred to as 'Shut Down' point & firm should close down its production in the case.

Given : MR = P = 3 ; MC = 4 ; AVC = 3.5 . The firm's price P (3) is not only lesser by its Marginal Cost MC (4), to decrease production ; but also lesser than its Average Variable Cost AVC (3.5) . So, the firm should shut down.

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The VP of Marketing directs you to begin looking at markets for Powerfully Fit's products: "Assuming that we focus on the desire
yawa3891 [41]

Options:

a) Gym Newbie: This largest market is new to fitness and working out. Gym newbies work out once a week and are price sensitive about their fitness spending.

b) Weekend Warriors: This large market works out 2-3 times a week and mixes up running with gym time. Weekend warriors typically purchase mid-level shoes and apparel and use a fitness app on their phone to track their workouts.

c) Marathon Madness: This mid-size market works out daily. Workouts often include long distance runs. Quality, durable products are attractive to this market, and marathoners are willing to pay premium prices to get the latest tech.

Answer:

C)

Explanation:

The VP of Marketing has directed you to search for a target market that values fitness technology functionality and are willing to pay for it. Gym newbies and weekend warriors might value the functionality but can get similar products at a lower costs since their needs are very basic.

You need people that workout constantly and for long periods of time. This type of clients really need high quality and durable products, so they are willing to pay for them. These guys and girls are not going to go around running and watching their cellphones, they are trying to improve their performance, not to worsen it. They are constantly looking for ways to be better athletes and train harder, and any help they can get is very valuable for them.

4 0
3 years ago
Shauna Lewis Company expects the following for 2018​: times Net cash provided by operating activities of $ 140 comma 000. times
mihalych1998 [28]

Answer:

Explanation:

Net cash provided by operating activities 140,000

Less: Capital expenditures -81,000

Less: Cash dividends paid -10,000

Free cash flow 49,000

3 0
3 years ago
Your portfolio has a beta of 1.28. The portfolio consists of 25 percent U.S. Treasury bills, 31 percent Stock A, and 44 percent
Ivanshal [37]

Answer:

2.21

Explanation:

Portfolio beta = Respective beta*Respective weight

<em>Beta of market=1;Beta of risk-free assets=0</em>

1.28 = (0.25*0) + (0.31*1) + (0.44*Beta of Stock B)

1.28 = 0 + 0.31 + 0.44*Beta of Stock B

1.28 - 0.31 = 0.44*Beta of Stock B

Beta of Stock B = 0.97/0.44

Beta of Stock B = 2.204545454545455

Beta of Stock B = 2.21

7 0
3 years ago
The management of Ro Corporation is investigating automating a process. Old equipment, with a current salvage value of $24,000,
Margaret [11]

Answer:

36.26%

Explanation:

Simple rate of return:

return/investment

<u>return:</u>

In this case, it will be the cost saving for the new machine: 161,000

<u>investment</u>

We will decrease the investment by the recovery from the old machine.

468,000 new machine - 24,000 salvage value of new   = 444,000

<u>Then, proceed to calculate:</u>

161,000/444,000 = 0.3612 = 36.26%

Consideration:

Is important to state that this rate, do not consider the time value of money, neither the cash flow of the project.

3 0
2 years ago
Routine, day-to-day business processes and interaction with customers occur at the ________ level of a firm.
Setler79 [48]

Answer:

Operational level

Explanation:

The operational level is the bottom level in an organization and it is at this level that <u>daily business operations and activities, that connect the organization directly with customers, take place.</u>

Examples of such activities include; manufacturing, marketing and selling.

8 0
2 years ago
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