MICROECONOMICS – UNIT 3 IP

MICROECONOMICS – UNIT 3 IP

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.

Please submit your assignment.

Your assignment will be graded in accordance with the following criteria. Click here to view the grading rubric.

For assistance with your assignment, please use your text, Web resources, and all course materials.
Individual Project Rubric:

Grading Criteria Percentage
Deliverable requirements addressed; understanding of material and writer’s message and intent are clear 35%
Scholarly research which supports writer’s position properly acknowledged and cited direct quotations may not exceed 10% of the word count of the body of the assignment deliverable (excluded title page, abstract or table of contents if used, tables, exhibits, appendices, and reference page(s). Inclusion of plagiarized content will not be tolerated and may result in adverse academic consequences. 20%
Critical thinking: Position is well-justified; logical flow; examples 20%
Structure: Includes introduction and conclusion; proper paragraph format and reads as a polished, academic paper or professional presentation, as appropriate for the required assignment deliverable 10%
Mechanical: No spelling, grammatical, or punctuation errors 10%
APA: Deliverable is cited properly according to the APA Publication Manual (6th ed.) 5%

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