Spreadsheet Problem 1 Chapter 8salvatore Chapter 8 Spreads ✓ Solved

Spreadsheet Problem 1 Chapter 8 Salvatore Chapter 8 Spreadsheet Problem 1 (p.364) Quantity of Output Total Variable Costs Total Costs AFC AVC ATC MC 0 $ - $ 30 NA NA NA NA 1 $ 20 $ 50 $ 30 $ 20 $ 50 $ $ $ $ $ 170 Note: Total Fixed Cost = $30.

Calculate and Compare the profit under each flight for Airway Express, considering their current and proposed flight schedules. Determine whether Airway Express should continue providing the flight between LA and NY.

Discuss the implications for short-run marginal cost for electric utility companies that operate their most modern equipment continuously and use older equipment for peak demand. Explain why firms do not replace all older equipment with new equipment in the long run.

For a publishing company, calculate the breakeven output and the output leading to a total profit of $60,000 given total fixed costs and average variable costs, including different scenarios applicable due to technological breakthroughs.

Use Excel to calculate equilibrium price using the supply and demand functions provided. Determine the profit based on the total cost function provided.

Analyze how new market entry affects demand elasticity and what adjustments should be made to pricing strategies in response to increased elasticity.

Discuss the effects of a decrease in U.S. interest rates on the Euro/U.S. exchange rate, utilizing carry trade concepts, and review the impact a dollar devaluation has on businesses and consumers in El Paso and Juarez.

Paper For Above Instructions

The analysis of the operational profitability of Airway Express’s flights between Los Angeles and New York leads to crucial insights concerning strategic decision-making. The current evening flight from LA has an average of 80 passengers outbound, while the return flight the next afternoon carries around 50 passengers. This arrangement incurs a charge of $1,200 for the plane remaining in New York overnight, compared to zero in Los Angeles. The airline is considering a switch to a morning flight expected to accommodate 70 passengers outwards and 50 passengers on the return. The ticket price is set at $200 per one-way flight, while operating costs are pegged at $11,000 per flight, with additional fixed daily costs of $3,000 irrespective of whether the flight takes off.

To understand the profitability, calculate the revenue and costs under both flight arrangements. The revenue for the evening flight is calculated as follows:

  • Revenue Evening Flight = 80 passengers x $200 = $16,000

  • Revenue Return Flight = 50 passengers x $200 = $10,000

The total revenue for the current flight schedule would thus be $26,000. Conversely, the costs include:

  • Operating Cost = 2 flights x $11,000 = $22,000

  • Fixed Costs = $3,000

Total Costs = $22,000 + $3,000 = $25,000. Therefore, the profit for the evening schedule is:

  • Profit = Total Revenue - Total Costs = $26,000 - $25,000 = $1,000.

In contrast, if Airway Express opts for the morning flight schedule, the revenue is:

  • Revenue Morning Flight = 70 passengers x $200 = $14,000

  • Revenue Return Flight = 50 passengers x $200 = $10,000

Total Revenue under the new scheme becomes $24,000, while the costs remain at:

  • Operating Cost = 2 flights x $11,000 = $22,000

  • Fixed Costs = $3,000

Thus, Total Costs = $22,000 + $3,000 = $25,000, leading to a profit of:

  • Profit = Total Revenue - Total Costs = $24,000 - $25,000 = -$1,000.

Upon comparing these profits, it becomes evident that Airway Express should maintain the evening flight, as transitioning to the morning flight would incur losses. The rationale for this decision hinges on both the absolute profit figures and the likelihood of passenger demand, demonstrating that profit-maximization strategies warrant staying with high-occupancy schedules.

Switching to an electric utility perspective, firms operating modern equipment around the clock while reserving older apparatus for peak demand reflects the short-run marginal cost implications. The operational model inherently leads to the marginal costs being equal to the average variable costs when producers are at capacity. It ensures that the efficient pricing aligns with these marginal costs to recover expenses while meeting demand, thereby optimizing resource allocation. However, the long-term reluctance to completely cannibalize older equipment arises from financial prudence: the depreciation and costs associated with completely overhauling machinery often outweigh immediate benefits, necessitating a fractional use of both newer and older technologies.

For publishers faced with varying output requirements, understanding breakeven output is crucial. In an instance where total fixed costs amount to $100,000 and average variable costs are pegged at $20 per unit, the breakeven analysis reveals that:

  • Breakeven Output = Total Fixed Costs / (Selling Price - Variable Production Cost) = 100,000 / (30 - 20) = 10,000 units.

On the other hand, should technological advances lower fixed costs to $40,000 or cut average variable costs to $10, the equations would need revisiting to adapt output requirements accordingly, projecting necessary updates in strategy that allow for continual profitability.

Excel calculations yield advantageous findings in equilibrium price determination via supply and demand functions. Should the market supply be characterized by Qs=3,250 and demand by Qd=4,750-50P, solving Qd = Qs while establishing P values from 25 to 50 provides insights into optimal pricing strategies that maintain balance in the marketplace.

Assessing changes in competition positions pricing strategies dynamically. A shift to greater elasticity necessitates price adjustments based on different competitive factors as well. Managers in competitive landscapes are indeed more likely to concentrate efforts on mitigating costs rather than solely defending price structures due to the inherent need for cost control amid tightening margins.

Finally, examining monetary dynamics reveals that decreased U.S. interest rates lead to a depreciation of the dollar, affecting U.S. imports and exports differently in interconnected markets like El Paso and Juarez. Changes to currency values directly influence the cross-border economic exchanges, affecting purchasing power and trading activities on both sides. As demand fluctuates, an efficient analysis of transaction impacts leads to comprehensive insight into regional economic conditions.

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