Explore BrainMass
Share

Explore BrainMass

    Output & Costs

    When looking at output and costs, the positive slope of the aggregate supply curve shows us how costs and prices are related to output. The aggregate supply curve compares price level to the quantity of output that firms produce and sell, assuming that technology and prices of the factors of production are constant.

    In theory, as output increases, less efficient plants and workers will have to be employed, as well as existing workers paid overtime for additional work. This makes unit costs (the cost per unit of output) increase, even when input prices and technology are still constant.

    If unit costs increase with output, price-taking firms will produce more if price increases, and less if the price falls. If the demand for the output of price-setting firms increases enough to take their outputs into the range where unit costs rise, these firms will not increase outputs until they pass at least some of the extra costs on through higher prices¹. When demand falls, they will reduce output and competition will cause a reduction in price when unit costs fall.

    Price setting firms will raise prices when they expand their output into the range where unit costs rise¹. Eventually, firms will decrease their prices if a reduction in output leads to a reduction in unit costs¹.

    The actions of price-taking and price-setting firms cause the price level and supply of output to be positively related – the aggregate supply (AS) curve is positively sloped¹. On an aggregate supply graph, the aggregate supply curve is positively sloped, showing that firms will produce more aggregate output only at a higher price level.

     

    References:

    1.  Ragan, Chrisopher. Macroeconomics/Christopher T.S. Ragan, Richard G. Lipsey. – 13th Canadian ed.

    © BrainMass Inc. brainmass.com September 17, 2019, 10:27 am ad1c9bdddf

    Determine the marginal product of inputs

    The production function for the automotive and parts industry is q=L^0.27K^0.16M^0.61, where M is the energy and materials. What kind of returns to scale does this production function exhibit? What is the marginal product of Labor, capital and Materials?

    Production and cost analysis

    The following table gives the total weekly output of bicycles at Al's Bicycle Town. Table 1 Labor Total Product (TP) Average Product of labor (AP) Marginal Product of labor (MP) 0 0 na na 1 100

    Positive vs Normative Statement

    Explain the difference between a positive and normative statement. Give an example of each type of statement. How can an economy achieve points that are outside the production possibilities curve? Review the Spillover Principle. Give an example of a good with a positive externality and a good with a negative externality (n

    Current state of healthcare industry as an FYI

    This is not a request to write the paper...only requesting feedback on the current state of healthcare industry as an FYI. Mandatory length for the paper is 2-3 pages so I need a response I can elaborate upon. The paper must (a) identify the pros & cons related to health insurance, (b) a solution to the issue, (c) optimal

    Adidas: profit maximization

    Assignment title: Imagine you are part of a strategic planning group at a large corporation that is considering developing a new proposed product. The marketing director has asked your team to do a competitive market analysis to determine the product's potential success. The analysis will focus on your primary competitor in t

    Competitive Firm's Total Cost Function

    Assume that a competitive firm has the total cost function: TC = 1q3 - 40q2 + 810q + 1500 Suppose the price of the firm's output (sold in integer units) is $700 per unit. Using calculus and formulas (but no tables and restricting your use of spreadsheets to implementing the quadratic formula) to find a solution, what is

    Perfect versus imperfect competition

    The following information is available about a firm: Output 0 1 2 3 4 5 6 7 8 Total Revenue - 30 60 9 120 150 180 210 240 Total Costs 70 100 122 135 140 145 154 179 220 a) Is the firm producing under perfect or imperfect competit

    Total, Fixed and Variable Costs

    I am having difficulty identifying whether there are any other variable costs other than the clinic supplies. The question specifically states the costs for each month which all appears to be fixed costs, however, there has to be variable costs in order to calculate other costs as required. Please help. Improved Access (IA),

    Differentiating between Types of Cost Curves

    What is a strategy for differentiating between all the different cost curves? Each one is shaped a certain way, and there is a definite relationship between all the different cost curves.

    Firms with Market Power Pricing Strategies

    Sam's Auto's faces a strategic managerial decision. The firm can sell cars by simply posting a price. If the customer is willing to buy, clerk's fill-out paperwork and the sale is complete. Alternatively, it can hire commissioned sales reps to probe customer's willingness and ability to pay. (These reps are trained to ask cu

    Marginal Analysis Global Corp

    (see attached for full problem description) 1 Global Corp. sells its output at the market price of $9 per unit. Each plant has the costs shown below: What is the profit at each plant when operating at its optimal output level? 2 Suppose that you can sell as much of a product (in integer units) as you like at

    Labor Productivity and Winner-Take-All Market

    I am having difficulty generating responses and ideas to the questions in this passage of 'Labour Markets and Labour Unions: Case Study, Winner-Take-All Labor Markets (attached) - What characterizes a winner-take-all labor market? Offer some reasons why corporate heads now earn much more than they did in the 1970s.

    Butcher, K. F., & Piehl, A. M. (1998). Cross‐city evidence on the relationship between immigration and crime. Journal of Policy Analysis and Management, 17(3), 457-493. • Authors Butcher and Piehl i

    Imagine a firm with the same cost structure but in each of the four market structures: Competitive, Monopolistically Competitive, Oligopoly, and a Monopoly. Using the concepts of consumer surplus and producer surplus, explain the long run outcome in each market structure and how consumer surplus, producer surplus and dead weight

    Profits in Competitive Markets

    Explain why in competitive markets there can be profit or producer surplus in the short run but not the long run. Include the idea of "economic rent" for exceptionally productive inputs. Then imagine a firm with the same cost structure but in each of the four very distinct market structures: (1) Purely Competitive, (2) Monopolis

    Profits in Competitive Markets

    Discuss about the role that profit and loss plays in a competitive market. Other than making the owners rich or poor, depending on if they make a profit or loss, what is the role that profit and loss plays? Question Why do we need profits, and why do we need losses?

    Cost and Revenue Diagram

    Construct line charts for the Average Cost (AC), Average Variable Cost (AVC), Marginal Cost (MC), Marginal Revenue (MR) and Average Revenue (AR) on a Cartesian coordinate system.

    Donut Store Price Decisions

    A donut store is located in a mall and is the only donut store in that mall. The demand schedule for donuts (per dozen) is given in the table below. If the marginal cost to produce a dozen donut is $4 per unit, how many units should the firm produce? Price Quantity Purchased (Dozen per day) $12 3 $11

    Market forms and optimal plant size

    The following questions address some of the price and output decisions faced by firms other than those found in perfect competition. Some numbers may be rounded. Table 1 Output Average Fixed cost Average Variable Cost ATC Marginal Cost Price Total Revenue Marginal Revenue 0

    Relevant and Irrelevant Costs

    Evaluate the second partner's advice not to move downtown. Illustrate and fully explain using an example of relevant cost (a cost whose value does affect the optimal decision) and an example of irrelevant cost (a cost whose value does not affect the optimal decision) to the business regarding this decision.

    Calculating Share of Income, Output, & Marginal Product of Labor

    Consider two competitive economies that have the same quantities of labor (L = 400) and capital (K = 400), and the same technology (A = 100). The economies of the countries are described by the following Cobb—Douglas production functions: North Economy: Y = A L^.3 K^.7 South Economy: Y = A L^.7 K^.3 a. In North Econo

    Fixed Costs, Variable Costs and Economies of Scale

    Can you please help me with the following scenario? Your rich uncle died and left you $100k, which you decided to use for your own internet business. What business will you go into, and what will comprise your fixed and variable costs? How could your business take advantage of economies of scale?

    Profit-maximizing price: Geographically divided markets

    A monopolist sells in two geographically divided markets, the East and the West. Marginal cost is constant at $50 in both markets. Demand and marginal revenue in each market are as follows: QE = 900 - 2Pe MRe = 450 - QE QW = 700 - PW MRw = 700 - 2Qw a. Find the profit-maximizing price and quantity in each market. b.

    Pharmaceutical Companies: Monopoly Over Production

    Suppose that a pharmaceutical company has a monopoly over the production of master cream, a drug used on skin rashes. Further suppose that the demand for master cream is given by the expression QD = 1,500 - P, where QD is the quantity demanded (in bottles) and P is the price. Assume that the company's costs are given by the expr

    Maximizing your profits

    Please help with the following problems. Provide step by step calculations for each. The yearly cost of producing computers is: C(Q) = 20,000 + 2Q2 , where 'Q' represents the number of computer systems produced. Marginal Cost (MC) = 4Q Yearly demand for computers is: Q = 1,000 - P, where 'P' represents the selling price

    firm's profit maximizing price and output

    You are the marketing manager of a firm that produces Titanium and sells this metal to two distinct kinds of customers: aircraft producers and golf club manufacturers. Demand for Titanium by these two market segments is quite different, as described by the respective price equations: PA = 10 - QA./600 and PG = 12 - QG./100, wher

    Marginal Cost, Total Fixed Product, and More

    1. ABC Manufacturing Company provided you with the following production data for the month of January. Complete the table: Units of Labor Total Output Average Product Marginal Product 0 0 1 200 2 450 3 660 4 840 5 940 2. Armel consumes two commodities only, meat and pot

    Analyzing the isoquant and isocost curves

    Consider the following graph, and answer questions a through e. Please see the attached MS Word document for the graph. a. If the price of capital is $7.50 per unit what is the per unit price of labor? b. How many units of labor should the firm use in order to produce 400 units of output at the least cost? c. The m