A competitive firm produces output y. Some of its output is defective and cannot be sold. That is, only a fraction θ E (0, 1) can be sold in the market at unit price p. Let the cost function be c(y), with (y) 0 and c"() >0. Suppose that with experience, the share of good output θ increases. Does the firm compensate for the increased yield by reducing production, or will it instead increase production?

Acoase solution to a problem of externality ensures that a socially efficient outcome is to

Martha entered into a contract with terry, an art dealer. according to the contract, terry was to supply 18 th century artifacts to martha for the play she was directing, and martha was ready to pay $50,000 for this. another director needed the same artifacts and was ready to pay $60,000. terry decided not to sell the artifacts to martha. in this case, the court may order terry to:

Exercise 2-12 cost behavior; high-low method [lo2-3, lo2-4] speedy parcel service operates a fleet of delivery trucks in a large metropolitan area. a careful study by the company’s cost analyst has determined that if a truck is driven 120,000 miles during a year, the average operating cost is 11.6 cents per mile. if a truck is driven only 80,000 miles during a year, the average operating cost increases to 13.6 cents per mile. required: 1.& 2. using the high-low method, estimate the variable and fixed cost elements of the annual cost of truck operation. (round the "variable cost per mile" to 3 decimal places.)