A company has a cost structure described in the table below. Using your knowledge of the types of costs involved in a production process, fill in the blanks in the table.

Use the Dynamic Exhibit to answer the following questions. Round your answers to two decimal places, if necessary. 1. When the number of units produced is 50,000, the total fixed cost is $ 500,000 and the cost per unit is $ . 2. When the number of units produced is 100,000, the total fixed cost is $ and the cost per unit is $ . 3. When the number of units produced is 150,000, the total fixed cost is $ and the cost per unit is $ . 4. When the number of units produced is 300,000, the total fixed cost is $ and the cost per unit is $

*** PLEASE ANSWER ALL QUESTIONS IN PARAGRAPH FORMAT.

The following case study provides information for a hotel chain. They have recently conducted a customer satisfaction survey. Given these research results and the other information in the case, what advice would you give them? This is a good exercise in utilizing the results of market research.

ACTIVITY/TASK

The Quick-Stop Hotel Chain

Quick-Stop Hotels is a small hotel chain located along on the north coast of New South Wales. This chain consists of five different hotel complexes located several hours drive apart along the main coastal highway between Sydney and Brisbane.

Their prime target market is the family segment. This is because families often choose to drive from Sydney to Brisbane (or Brisbane to Sydney) and back again for their holidays. As this trip is around a 12-hour drive, many travelers choose to stop overnight in order break up their journey. Therefore, Quick-Stop has deliberately chosen popular stopover towns for their hotels.

In line with this location strategy, they promote themselves with the slogan, “the “perfect place for a break”.

Their individual hotels vary a little in quality, but all have either a 3 or a 4 star rating. This means that they are either medium (3 star) or good (4 star) quality in terms of facilities and general standard of accommodation. On average, they each have around 80 rooms and a fairly broad range of facilities (that is, a heated swimming pool, room service, restaurant and bar, a kid’s club during school holidays, a small gym, and some have tennis courts and a couple of stores).

In terms of promotion, they are heavy outdoor (billboard) advertisers on the coastal highway. They also advertise in various holiday and travel directories, and on the government tourism website.

As you can see from the table below, they vary pricing throughout the year. Pricing is generally used as a tool to increase demand in the low season and to increase revenue in the high season. This is necessary as they have highly seasonal demand, being frequently being booked out over the Christmas holiday period, and with very high demand in other school holiday periods.

The table also shows the results of a customer satisfaction survey for Quick-Stop Hotels. On average, 80% of customers indicated that they were satisfied with their stay and 10% were delighted with their stay. However, 10% indicated they were dissatisfied. These figures vary by season, whether the customer was a first-time customer, and by the quality of the individual hotel. Additionally, the table includes information on average room rates (per night) and occupancy levels. (Note: The occupancy level is the percentage of rooms occupied per night.)

QUESTIONS

1. Review the customer satisfaction information. Does it make sense? Why/why not?
2. Given these research results and the other information in the case, what advice would you give this firm.
3. Which of the above metrics did you find helpful? Which did you ignore?
4. What other information would have been helpful?

1. Use the data in the table and calculate the average costs and marginal cost.     

2. Discuss the nature of the Average total cost curve. Is it increasing or decreasing? Explain with reason.                                                                                                                         
3. What is the relation between Average total cost and marginal cost? Draw the typical shape of Average total cost (ATC) and Marginal cost (MC). When will the firm achieve maximum efficiency?                                                                                                         

Changing the Cost Formula for a Month to the Cost Formula for a Year During the past year, the high and low use of three different resources for Fly High Airlines occurred in July and April. The resources are airplane depreciation, fuel, and airplane maintenance. The number of airplane flight hours is the driver. The total costs of the three resources and the related number of airplane flight hours are as follows:   

Required:

If required, round calculations and answers to nearest dollar.

1. Develop an annual cost formula for airplane depreciation.

Total annual cost of airplane depreciation = ____ x ($__________)

Develop an annual cost formula for fuel.

Total annual cost of fuel = $_________×___________

Develop an annual cost formula for airplane maintenance.

Total annual cost of airplane maintenance = (___________x $___________) + ($__________×_____________)

2. Using the three annual cost formulas that you developed, predict the cost of each resource in a year with 487,000 airplane flight hours.

Total annual cost of airplane depreciation $

Total annual cost of fuel $

Total annual cost of airplane maintenance $

Changing the Cost Formula for a Month to the Cost Formula for a Year

During the past year, the high and low use of three different resources for Fly High Airlines occurred in July and April. The resources are airplane depreciation, fuel, and airplane maintenance. The number of airplane flight hours is the driver. The total costs of the three resources and the related number of airplane flight hours are as follows:

Required:

If required, round calculations and answers to nearest dollar.

1. Develop an annual cost formula for airplane depreciation.

Total annual cost of airplane depreciation =  x ( $ )

Develop an annual cost formula for fuel.

Total annual cost of fuel = $ ×  

Develop an annual cost formula for airplane maintenance.

Total annual cost of airplane maintenance = ( x $ ) + ( $ ×   )

2. Using the three annual cost formulas that you developed, predict the cost of each resource in a year with 484,000 airplane flight hours.

1. Consider each of the following scenarios for profit maximizing firms operating in perfectly competitive markets. For each firm, state whether the firm should produce nothing, or increase, decrease, or maintain its output level.
   1. XYZ Corp. has output of 2000 units, market price = $64, average total cost = $62, average variable cost = $48, and marginal cost = $67.
   2. XYZ Corp. has output of 2000 units, market price = $64, average total cost = $70, average variable cost = $66, and marginal cost = $64.
   3. XYZ Corp. has output of 2000 units, market price = $64, average total cost = $64, average variable cost = $62, and marginal cost = $64.
   4. XYZ Corp. has output of 2000 units, market price = $64, average total cost = $62, average variable cost = $48, and marginal cost = $67.
   5. UVW Corp. has output of 6000 units, market price = $10, total costs = $72 000, total variable costs = $66 000, and marginal cost = $9.
   6. UVW Corp. has output of 10 000 units, market price = $4, total costs = $50 000, total variable costs = $30 000, and marginal cost = $4.

Beige Book - April 18, 2018

The Federal Reserve released its regular "Beige Book." the April 18th release. Read and write a one page summarizing the details of the report. What’s happening in employment and wages, price and consumer spending, Manufacturing and Distribution, service and finance and banking in March.

Federal Reserve Bank of New York

Overall Economic Activity
Economic activity continued to expand at a modest to moderate pace across the 12 Federal Reserve Districts in March and early April. Outlooks remained positive, but contacts in various sectors including manufacturing, agriculture, and transportation expressed concern about the newly imposed and/or proposed tariffs. Consumer spending rose in most regions, with gains noted for nonauto retail sales and tourism, but mixed results for vehicle sales. Manufacturing activity grew moderately, and demand for nonfinancial services was mostly solid. Residential construction and real estate activity expanded further, although low home inventories continued to constrain sales in several Districts. Loan demand increased, and commercial real estate activity and construction improved since the last report. Transportation services activity expanded in over half of the reporting Districts, buoyed by increases in port traffic and/or air, rail and/or trucking shipments. Agricultural conditions were little changed or worsened on net, in part due to persistent drought conditions. Contacts in the energy sector cited a pickup in activity, except in the Richmond District, where coal production was flat and natural gas production dipped slightly.

Employment and Wages
The labor market has remained tight and hiring activity has been steady. One employment agency in upstate New York noted a seasonal pickup in hiring. A major New York City agency indicated that hiring has been robust and that it is taking longer to fill jobs, particularly those requiring technical skills. Businesses noted particular shortages of tech workers, truck drivers, and skilled tradespeople. A few contacts cited difficulties in attracting young job-seekers away from major urban centers.

Business contacts in the finance and information sectors reported fairly brisk hiring activity, while those in manufacturing, wholesale trade, education & health, and leisure & hospitality indicated modest hiring, on net. Retailers continued to report declining employment. Still, firms in most service industries, including retail, said they plan to expand hiring in the months ahead, while manufacturers have scaled back hiring plans.

Businesses across all major service industries reported ongoing wage pressures. Some contacts maintained that wages had accelerated over the past year, though plans to raise wages in the months ahead were little changed. A New York City agency reports that a new law prohibiting potential employers from asking about a candidate's salary history has led candidates to demand higher pay.

Prices
Input prices have continued to rise briskly but have not accelerated further, according to contacts in most industry sectors. Still, businesses generally anticipated further increases in the months ahead. A growing proportion of service-sector contacts indicated that they were raising their selling prices--most notably, wholesalers--but manufacturers noted only modest hikes in their prices.

Among retailers, some contacts indicated that they have held prices steady, while others reported price increases. Prices for New York City hotel rooms and Broadway theater tickets picked up noticeably in March. Looking ahead, a growing proportion of businesses in manufacturing and wholesale trade said that they planned to raise their prices, while most retailers did not foresee any significant price hikes.

Consumer Spending
Retail contacts reported that sales have picked up somewhat in recent weeks but are still considered lackluster, reflecting unseasonably cold and wet weather. Retailers in upstate New York indicated that sales have strengthened but remained fairly subdued, despite strong customer traffic. A major retail chain noted that sales advanced in March, running somewhat ahead of plan and up modestly from a year ago. Inventories were generally reported to be at satisfactory levels, and retailers were moderately optimistic about the near-term outlook.

New vehicle sales in upstate New York were reported to have weakened in February but there were some signs of a rebound in March. Sales of used cars were steady to up slightly. Vehicle inventories were said to be in fairly good shape. Dealers continued to characterize retail and wholesale credit conditions as favorable. Consumer confidence in the Middle Atlantic states (NY, NJ, PA) edged up to a new multi-year high in March.

Manufacturing and Distribution
Manufacturers reported some acceleration in growth since the last report. In contrast, wholesalers indicated a pause in growth, and transportation firms reported some decline in activity. Looking ahead, manufacturers have become substantially less optimistic about the near-term outlook, while contacts in wholesale distribution and transportation have remained moderately optimistic.

Services
Reports from service-sector firms were mixed but generally pointed to little growth in activity. Contacts in professional & business services and leisure & hospitality reported modest growth, while those in the information and health & education sectors reported flat activity. Service sector businesses have grown less optimistic about the near-term outlook, most notably in the health & education sector.

Tourism in New York City has picked up since the last report. Hotels reported an increase in both revenues and occupancy rates in March. Broadway theaters indicated that business was sluggish in February and early March but picked up noticeably in the second half of the month.

Banking and Finance
Small to medium size banks in the District reported higher demand for residential mortgages, commercial mortgages, and C&I loans, and steady demand for consumer loans. Banks reported lower loan spreads for consumer loans and residential mortgages, and no change in spreads across all other loan categories. Bankers reported that both credit standards and delinquency rates were unchanged across all loan categories.

The Great Depression was ended in the United States by:

1)the government running budget surpluses throughout the 1930s.
2)the government increasing the money supply throughout the 1930s.
3)central planning of the economy by the government.
4)the huge amounts of government spending required to fight WWII during the early 1940s.

The main difference between the classical model of the price level and the modern understanding of the relationship between the money supply, the price level, and real GDP is that according to classical economists, _____, while today's economists _____.

1)money is neutral in the long run; do not consider money to be neutral in the long run.
2)the adjustment of prices takes some time; expect changes in the money supply to be instantaneous.
3)did not consider money to be neutral in the long run; consider money neutral in the long run.
4)the adjustment of prices to changes in the money supply is instantaneous; argue that this adjustment process takes some time.

The main idea behind monetarism is that:

1)the aggregate output will be even greater than potential output if the money supply grows at a constant rate.
2)the aggregate price level will increase proportionally if the money supply grows at a constant rate.
3)the government budget will have a deficit if the government spending grows at a constant rate.
4)the aggregate output will grow steadily at a constant rate if the money supply also grows at a constant rate.