ECON 1 Lecture Notes - Lecture 22: Sunk Costs, Fixed Cost, Variable Cost

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ECON 1 Lecture Notes - Lecture 21: Competitive Equilibrium, Externality, Social Cost

ECON 1 Lecture Notes - Lecture 22: Sunk Costs, Fixed Cost, Variable Cost

ECON 1 Lecture Notes - Lecture 23: Intelligence Quotient, Net Income

Document Summary

A period of decisions can be changed time during which only some. A period of decisions to be changed expand business shut down business long enough to allow all in experiment stage 1 long run to rent decide whether stage 2 how many meals to sell. Fixed cost costs and are overhead variable cost fixed in short rent etc run some e g other costs vary with output e g raw materials labor etc in experiment 4. Fixed costs 1 variable cost x units produced. 2468 meals supply curve doesn"t consider sunk cost overhead i only variable cost produce it positive contribution 1. 4 people open restaurants i supply curve extends 4 times original decisions can"t be changed in run. 8 damage minimizing otherwise lose more money regret decision to open some will close tease expires. It when price and quantity will change more produced decreases each firm earn less firms shifting out supply i move units equilibrium price restaurant.

Related Questions

I have been asked to write an introduction to a presentation that we have to do as a group, my part is to write an introduction and present it! Case 2: Near-Empty Restaurants and Off-Season Miniature Golf on p. 287 With the understanding of fixed and variable costs and what those mean to a business in both the short run and the long run, address the following questions in your analysis: Why does it makes sense for an airline to offer discounted fares to students, senior citizens, or some other group, when those fares are lower than the average cost per passenger? Would it make sense to offer deeply discounted fares, such as a $59 ticket from Los Angeles to San Francisco, 1 hour before departure? Why? Does it make sense for a restaurant to offer early-bird specials and senior citizen discounts? Explain your answers in terms of the economic concepts of marginal revenue and marginal cost, as applicable

CASE 2 "

Near-Empty Restaurants and Off-Season Miniature Golf empty? Why you might h Have you ever walked into a restaurant for lunch and found it almost to stay open? It might seem that the revenue from so asked, do the restaurants even bother to possibly cover the cost of running the restaurant. customers could not in deciding whether to. open for lunch, a restaurant owner must keep in mind the distinction between fixed and variable costs. Many of a restaurant's costs the rent, kitchen equipment, tables, plates, silverware, and so on are fixed. Shutting down during lunch would not reduce these costs. In other words, these costs are sunk in the short run. When the owner is deciding whether to serve lunch, only the variable costs the price of the additional food, and the wages of the extra staff are relevant. The owner shuts down the restaurant at lunchtime only if the revenue from the few lunchtime customers fails to cover the restaurant's variable costs. An operator of a miniature golf course in a summer resort community faces a similar decision. Because revenue varies substantially from season to season, the firm must decide when to open and when to close. Once again, the fixed costs the costs of buying the land, and building the course is irrelevant in making this short-run decision. The miniature-golf course should be open for business unify during those times of the year when its revenue exceeds its variable costs."

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ECON 1 Lecture Notes - Lecture 22: Sunk Costs, Fixed Cost, Variable Cost

ECON 1 Lecture Notes - Lecture 21: Competitive Equilibrium, Externality, Social Cost

ECON 1 Lecture Notes - Lecture 22: Sunk Costs, Fixed Cost, Variable Cost

ECON 1 Lecture Notes - Lecture 23: Intelligence Quotient, Net Income

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