The El Dorado Star is the only newspaper in El Dorado, New Mexico. Certainly, the Star competes with The Wall Street Journal, USA Today, and the New York Times for national news reporting, but the Star offers readers stories of local interest, such as local news, weather, high-school sporting events, and so on. The El Dorado Star faces the revenue and cost schedules shown in the spreadsheet that follows:
A template for the spreadsheet is provided in the Course Materials. Since we are using dollars and cents, be sure to go out two decimal places on your calculations. Add columns to show, respectively, marginal cost (MC), marginal revenue (MR), and total profit.
Place your completed spreadsheet in the Drop Box, and use it to answer the following questions. Your spreadsheet is worth 15 points.
Your spreadsheet must include formulas showing how you arrived at the calculations. As an alternative, you may also submit a document showing your step-by-step calculations for each of the cells. You will not receive credit if you do not show your work using one of these two methods.
Number of newspapers per day (Q) |
Total revenue (including advertising revenues) per day (TR) |
Total cost per day (TC) |
0 |
0 |
3800 |
1000 |
3500 |
3900 |
2000 |
4500 |
4000 |
3000 |
5000 |
4160 |
4000 |
5250 |
4320 |
5000 |
5450 |
4500 |
6000 |
5625 |
4690 |
7000 |
5725 |
4890 |
8000 |
5625 |
5110 |
9000 |
5475 |
5350 |
Should the Star shut down or continue to produce in the short-run? If they should continue to produce, how many papers should they produce? Explain your result in at least 100 words. Be sure to include total profit in your explanation.
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