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

Microeconomics Questions & Answers

  What do you mean by investment in human capital use this

what do you mean by investment in human capital? use this concept to describea wage differentials and b long-run rise

  Which is four sentences minimum summarize the article

The article must be from one of the three choices above. In one paragraph, which is four sentences minimum summarize the article.

  How the the dot notation and dot convention

How the The Dot Notation and Dot Convention work in Transformer Phasing ?

  Describe each market structure discussed in the course

Describe each market structure discussed in the course (perfect competition, monopolistic competition, oligopoly, and monopoly) and discuss two of the market characteristics of each market structure. Identify one real-life example of a market structu..

  Write down the different types of unemployment how do they

what are the different types of unemployment? how do they affect the economy? what is inflation? what is deflation?

  Which supply curve represents the initial supply curve

Given the above information, which supply curve represents the initial supply curve before the gasoline exporting countries decide to sell gasoline at a lower price

  Determine the pattern of production and trade

In our treatment of the Ricardian model We have focused on the case of trade involving only two nations. Assume that there are many nations capable of producing two goods

  What does the change in opportunity costs

Compare and contrast the two industries you have identified in terms of size, products, services, customers, economic and regulatory environment.

  How big will that budget have to spend

How big will that budget have to be before he would spend a $1 buying a first cup of coffee?

  Operatingin a purely competitive market

Assume that a firm is operatingin a purely competitive market and that its input-output relationship is of thefollowing form:

  Identify production level to maximize profitsexplain how to

identify production level to maximize profitsexplain how to balance fixed and variable costsapply economic cost

  Describe the problem from a research perspective

Describe the problem from a research perspective along with its significance in society. This is a simple paper that guides the rest of your research design projects later in the course.

Free Assignment Quote

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd