Business Analytics and Econometrics
1. In your new column 4, what is the value of MR when Q = 8,000?
-0.1
2. In your new column 5, what is the value of MC when Q = 8,000?
0.22
3. How many papers should the manager of the El Dorado Star print and sell daily?
5000
4. Did your answer in the previous question yield the maximum total profit, as shown in column 6 of your spreadsheet? Yes or NO will be sufficient for this question.
Yes
5. How much profit (or loss) will the Star earn?
750
6. At the profit-maximizing output level you reported in question 3, is the El Dorado Star making the greatest possible amount of TOTAL REVENUE? Is this what you expected? Explain BRIEFLY (but not too briefly) why or why not.
No, this is what I expected. This is because a firm cannot maximize total revenue and profit at the same time.
7. What is total fixed cost for Star?
2000
8. If Star's total fixed cost were to DOUBLE for some reason, how many papers should it sell?
It would not sell
9. How much profit does Star make when fixed costs are doubled?
It would be making losses and not profits
10. If Star’s fixed costs double, should it shut down in the short run or continue producing? Explain briefly (One sentence should be sufficient).
It should shut down since it can only continue producing in the short run if it receives zero profits.
References
Frank, Robert H., Ben Bernanke, and Louis Johnston. Principles of microeconomics. Brief 2nd ed. New York: McGraw-Hill/Irwin, 2011. Print.
