## Production, Costs, and Perfect Competition

Production, Costs, and Perfect Competition

Order Description

A firm currently uses 50,000 workers to produce 120,000 units of output per day. The daily wage per worker is \$100, and the price of the firm’s output is \$48. The cost of other
variable inputs is \$400,000 per day. (Note: Assume that output is constant at the level of 120,000 units per day.)
Assume that total fixed cost equals \$900,000. Calculate the values for the following four formulas:
Total Variable Cost = (Number of Workers x Worker’s Daily Wage) + Other Variable Costs
Total Costs = Total Variable Costs + Total Fixed Costs
Total Revenue = Price * Quantity
Average Variable Cost = Total Variable Cost / Units of Output per Day
Average Total Cost = (Total Variable Cost + Total Fixed Cost) / Units of Output per Day
Complete the following:
Calculate the firm’s profit or loss. Is the firm making a profit or a loss?
Explain the Short Run Shut Down Rule. Should this firm shut down? Please explain.
Provide a report to the management of the firm that disusses what should be done.
Be sure to show your work to support the decision that you outline in your report.

Assignment Description
A firm currently uses 50,000 workers to produce 120,000 units of output per day. The daily wage per worker is \$100, and the price of the firm’s output is \$48. The cost of other
variable inputs is \$400,000 per day. (Note: Assume that output is constant at the level of 120,000 units per day.)
Assume that total fixed cost equals \$900,000. Calculate the values for the following four formulas:
Total Variable Cost = (Number of Workers x Worker’s Daily Wage) + Other Variable Costs
Total Costs = Total Variable Costs + Total Fixed Costs
Total Revenue = Price * Quantity
Average Variable Cost = Total Variable Cost / Units of Output per Day
Average Total Cost = (Total Variable Cost + Total Fixed Cost) / Units of Output per Day
Complete the following:
Calculate the firm’s profit or loss. Is the firm making a profit or a loss?
Explain the Short Run Shut Down Rule. Should this firm shut down? Please explain.
Provide a report to the management of the firm that discusses what should be done.
Be sure to show your work to support the decision that you outline in your report.
This assignment will also be assessed using the Common Assessment criteria provided here.
Microeconomics, Chapters 6, 7, 8
Assignment Objectives
Explain concepts of microeconomics
Interpret various forms of competition
Predict the overall performance of an economic system
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Assignment Details
Assignment Description
A firm currently uses 50,000 workers to produce 120,000 units of output per day. The daily wage per worker is \$100, and the price of the firm’s output is \$48. The cost of other
variable inputs is \$400,000 per day. (Note: Assume that output is constant at the level of 120,000 units per day.)
Assume that total fixed cost equals \$900,000. Calculate the values for the following four formulas:
Total Variable Cost = (Number of Workers x Worker’s Daily Wage) + Other Variable Costs
Total Costs = Total Variable Costs + Total Fixed Costs
Total Revenue = Price * Quantity
Average Variable Cost = Total Variable Cost / Units of Output per Day
Assignment Overview
Type: Individual Project
Unit: Production, Costs, and Perfect Competition
Due Date: Sun, 6/28/15
Points Possible: 120
Points Earned: 0
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Total Variable Cost = (Number of Workers x Worker’s Daily Wage) + Other Variable Costs
Total Costs = Total Variable Costs + Total Fixed Costs
Total Revenue = Price * Quantity
Average Variable Cost = Total Variable Cost / Units of Output per Day
Average Total Cost = (Total Variable Cost + Total Fixed Cost) / Units of Output per Day
Complete the following:
Calculate the firm’s profit or loss. Is the firm making a profit or a loss?
Explain the Short Run Shut Down Rule. Should this firm shut down? Please explain.
Provide a report to the management of the firm that discusses what should be done.
Be sure to show your work to support the decision that you outline in your report.