Werner & Sons Is a Manufacturer of Three-Ring Binders Operating

Essay

Werner & Sons is a manufacturer of three-ring binders operating in a perfectly competitive industry.Table 8-5 shows the firm's cost schedule.
Table 8-5

Use the table to answer the following questions.
a.Complete Table 8-5 by filling in the blank cells.
b.Werner is selling in a perfectly competitive market at a price of $40.What is the profit maximising or loss-minimising output?
c.Calculate the firm's profit or loss.
d.Should the firm continue to produce in the short run? Explain.
e.If the firm's fixed costs were $30 higher,what would be the profit-maximising output level in the short run? Indicate whether the output level will increase,decrease or remain unchanged compared to your answer in b.
f.Suppose fixed cost remains at $76.If the price of three-ring binders falls to $20 what is the profit-maximising or loss-minimising output?
g.Calculate the profit or loss.Should the firm continue to produce in the short run? Explain your answer.
h.Suppose the fixed cost remains at $76.What price corresponds to the shut-down point?
i.Suppose the fixed cost remains at $76.What price corresponds to the break-even point?