Let's explore how rising costs helped to kill off most printed newspapers after the Internet became available in the mid-1990s. Imagine that you are a newspaper publisher in the year 2004. You are in the middle of a one-year factory rental contract that requires you to pay $700,000 per month, and you have contractual salary obligations of $1,250,000 per month that you can't get out of. You also have a marginal printing cost of $0.35 per paper as well as a marginal delivery cost of $0.10 per paper. Instructions: Enter your answers rounded to two decimal places. a. If sales fall by 20 percent from 1,000,000 newspapers per month to 800,000 newspapers per month, what happens to the AFC per newspaper? AFC per newspaper (Click to select) + from $ | b. What happens to the MC per newspaper? MC per newspaper (Click to select) to $ c. What happens to the minimum amount that you must charge to break even? It (Click to select) : from $ to $

Principles of Economics 2e
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Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter7: Production, Costs, And Industry Structure
Section: Chapter Questions
Problem 31CTQ: A common name for fixed cost is overhead. If you divide fixed cost by the quantity of output...
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Let's explore how rising costs helped to kill off most printed newspapers after the Internet became available in the mid-1990s. Imagine
that you are a newspaper publisher in the year 2004. You are in the middle of a one-year factory rental contract that requires you to
pay $700,000 per month, and you have contractual salary obligations of $1,250,000 per month that you can't get out of. You also have
a marginal printing cost of $0.35 per paper as well as a marginal delivery cost of $0.10 per paper.
Instructions: Enter your answers rounded to two decimal places.
a. If sales fall by 20 percent from 1,000,000 newspapers per month to 800,000 newspapers per month, what happens to the AFC per
newspaper?
AFC per newspaper (Click to select) : from $
b. What happens to the MC per newspaper?
MC per newspaper (Click to select) ÷
c. What happens to the minimum amount that you must charge to break even?
It (Click to select) : from $
to $
Transcribed Image Text:Let's explore how rising costs helped to kill off most printed newspapers after the Internet became available in the mid-1990s. Imagine that you are a newspaper publisher in the year 2004. You are in the middle of a one-year factory rental contract that requires you to pay $700,000 per month, and you have contractual salary obligations of $1,250,000 per month that you can't get out of. You also have a marginal printing cost of $0.35 per paper as well as a marginal delivery cost of $0.10 per paper. Instructions: Enter your answers rounded to two decimal places. a. If sales fall by 20 percent from 1,000,000 newspapers per month to 800,000 newspapers per month, what happens to the AFC per newspaper? AFC per newspaper (Click to select) : from $ b. What happens to the MC per newspaper? MC per newspaper (Click to select) ÷ c. What happens to the minimum amount that you must charge to break even? It (Click to select) : from $ to $
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