Katrina’s Candies costs of production for the expansion decision
From the scenario for Katrina’s Candies, determine the relevant costs for the expansion decision and distinguish between the short- and long-term costs. Recommend the key decision-making criteria that Katrina’s Candies should use for expansion decisions in the short run and in the long run. Determine under what conditions a company should (or should not) continue to produce a good or service. Option #1: Test your understanding of implicit costs, explicit costs, accounting profit, and economic profit.
John manages his own firm for 40 hours every week without receiving a wage. He might be making $600 per week working for his former employer. He owes the bank $100,000 despite having invested $100,000 of his own money in his company. His bank debt carries a weekly interest payment of $200. What is John’s economic profit if his accounting profit is $1,000 each week? Option #2: Evaluate your comprehension of production principles. • Take into account the production schedule below. Where does the average labor output reach its maximum, and when does the shrinking marginal product of work begin to take hold? Find the optimal production equation to estimate total output using regression analysis, where labor is the “X” variable. labor output 0 0 6 1 16 2 29 3 44 4 55 5 60 6 62 7 62 8 61 9 59
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