Briefly explain the sunk cost fallacy

Assignment Help Microeconomics

Reference no: EM131586938 , Length: 3

Assessment Questions/Problems

Q1. Outline and explain the rational actor paradigm. Give any two examples of when it has not held.

Q2. Outline the advantages and disadvantages of using net present value and break even analysis as criteria for assessing a firm's investment decision.

Q3. An ice cream factory has set up shop in town. It paid $200k for the land and $100K for custom machinery that cannot be relocated elsewhere. The factory can produce litres of ice cream with the following operating schedule:

Volume (000's litres)	Operating cost schedule
100	$50k
200	$150k
300	$350k
400	$550k
500	$750k
600	$1.05M

a) Briefly explain the sunk cost fallacy.

b) What are the sunk costs for the firm?

c) If the ice cream is sold for $2.50 per litre (hint: allow for 000's units), what is the optimum quantity the factory should produce?

d) What is the profit or loss it will make at the optimum quantity?

Reference no: EM131586938

Questions Cloud

Explain the expected value rule and mean-variance rule : Define and explain the expected value rule and mean-variance rule. How they would be useful to manager in business?

Why do economists make assumptions : 1. How is economics a science? 2. Why do economists make assumptions? 3. Should an economic model describe reality exactly?

How do shakespeare and olivier respectively try : What must or might be true about Shakespeare's and Olivier's audience because of the content in the play and the film?

The confidentiality or integrity of that system : Provide an example of a system where the availability of a system is more important than the confidentiality or integrity of that system.

Briefly explain the sunk cost fallacy : ECO5000 Assessment Questions/Problems. An ice cream factory has set up shop in town. Briefly explain the sunk cost fallacy

Characteristics of a competitive market : Compare and contrast the characteristics of a competitive market, monopoly, monopolistic competition, and oligopoly.

Write out the first several terms of the given sequence : For each of the following closed forms, write out the first several terms of the sequence (at least five) and use this to create a recursion for the sequence.

Profit-maximizing price per drug treatment : Suppose that the marginal cost per drug treatment is constant at $20. What is the profit-maximizing price per drug treatment?

Write a status report - indication of status of the project : Write a one page status report (excluding the title page) to the sponsors providing a clear indication of status of the project

Reviews

len1586938

8/2/2017 3:25:24 AM

Australian student, Kindly find the attach file and please read the requirement carefully. The assignment is three question should be answered in three pages, 1 page for each question, also the reference if required should not exceeded 3 reference for the whole assignment. A cover page will go at the front of your assignment submission. It must contain the following information at a minimum: Name (in full), USQ student number. The answer to each question shall have a maximum length of one (1) A4 page, font size 12. Content which goes over the one page limit per question will not be marked.

len1586938

8/2/2017 3:25:18 AM

Each question shall be marked out of five (5) – content 4.5, research, presentation, grammar, spelling etc 0.5 Maximum length of your submission shall therefore be four (4) pages. References (if needed and up to a maximum of three) should be placed at the end of your answer to each question. Files extensions that can be submitted are: doc, docx, rtf. Title your file with your surname. Submission is through the Assignment 1 portal which will be on the front page of the study desk.

Write a Review

Required(*) Message

Microeconomics Questions & Answers

The free rider problem

Question: Explain why the free rider problem makes it difficult for perfectly competitive markets to provide the Pareto efficient level of a public good.

Failure of the super committee is good thing for economy

Some commentators have argued that the failure of the “Super committee” is good thing for the economy? Do you agree?

Case study analysis about optimum resource allocation

Case study analysis about optimum resource allocation: - Why might you suspect (even without evidence) that the economy might not be able to produce all the schools and clinics the Ministers want? What constraints are there on an economy's productio..

Fixed cost and vairiable cost

Questions: : Which of the following are likely to be fixed costs and which variable costs for a chocolate factory over the course of a month? Explain your choice.

Problem - total cost, average cost, marginal cost

Problem - Total Cost, Average Cost, Marginal Cost: - Complete the following table of costs for a firm. (Note: enter the figures in the MC column between outputs of 0 and 1, 1 and 2, 2 and 3, etc.)

Oligopoly and demand curve problem

Problem based on Oligopoly and demand curve, Draw and explain the demand curve facing each firm, and given this demand curve, does this mean that firms in the jeans industry do or do not compete against one another?

Impact of external costs on resource allocation

Explain the impact of external costs and external benefits on resource allocation; Why are public goods not produced in sufficient quantities by private markets? Which of the following are examples of public goods (or services)? Delete the incorrec..

Shifts in demand and movements along the demand curve

Describe the differences between shifts in demand and movements along the demand curve. What are the main factors which can shift the demand curve? Explain why they cause the demand curve to shift. Use examples and draw graphs to support your discuss..

Article review question

Article Review Question: Read the following excerpts from the article "Fruit, veg costs surge' by Todd, Dagwell, published in the Herald on January 25th 2011 and answer questions below:

Long-term growth, international trade & globalization

Long-term Growth, International Trade & Globalization:- This question deals with concepts such as long-term growth, international trade and globalization. Questions related to trade deficit, trade surplus, gains from trade, an international trade sce..

European monetary union (emu) in crisis

"Does the economic bailout of Spain and Greece spell the beginning of the end for the European Monetary Union (EMU)?"

Development game “settlers of catan”

Read the rules of the game, the overview and the almanac for the Development Game "Settlers of Catan"

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

User Account

All Pages