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Output & Costs

Break Even & Growth Rate Questions

I. A company has fixed cost of $200,000. The sales price of its output is $56 per unit. It has variable costs of $31 per unit. The company is going to install new equipment which will cut the fixed costs to $150,000 but which will increase variable costs to $34 per unit. The sales price will remain at $56. 1)Find the break e

Widgets Inc.: ratios to calculate ability to pay dividends

You're the CFO of Widgets Inc. The CEO comes to you concerned, because while sales seem to be very strong, there does not seem to be profits to pay dividends demanded by the shareholders. He wants to know if you could let him know how well the company is using its assets, and how the net profit compares to net sales. You reme

Profit Maximization Explained

Question 1 Consider the following short-run production function (where L = variable input, Q = output): Q = 10L – 0.5L2 Suppose that output can be sold for $10 per unit. Also assume that the firm can obtain as much of the variable input (L) as it needs at $20 per unit. a. Determine the marginal revenue product fun

Marginal Revenue & Profits

A- A firm with market power produces widgets at a marginal cost of $10 per unit and zero fixed costs. It faces a demand function given by P = 50 - Q. What is the marginal revenue for the firm? b- A firm with market power produces a chip at a marginal cost of $10 per unit and zero fixed costs. It faces a demand function given

Breakeven Output and Total Sales Revenue

The Goldberg-Scheinman Publishing Company is publishing a new managerial economics text for which it has estimated the following total fixed and average variable costs. Total Fixed Costs: Copy Editing 10,000 Typesetting 70,000 Selling and Promotion 20,000 Total fixed costs: 100.000 Average Variable Costs

Short-Run Firm Supply

Tinley Paper, Inc. produces uncoated paper used in a wide variety of industrial applications. Newsprint, a major product, is sold in a perfectly competitive market. The following relation exists between the firm's newsprint output and total production costs: Total Output (tons) Total Cost ($) 0

Oppotunity costs

Total Hours Hours Studying GPA Hours Working Income 60 60 4.0 0 $0.00 60 40 3.0 20 $100.00 60 30 2.0 30 $150.00 60 10 1.0 50 $250.00 60

AD and/or AS curve shifts

For each of the following events, indicate whether the AD or the AS curve shifts. Briefly explain the reasoning behind your choice. a. The government increases defense spending. b. Oil prices rise dramatically. c. Stock prices and housing values fall. (Hint - this would decrease household wealth.) d. Our largest

Stages of Production

Problem 2. A firm has following short-run production function: Q=50L+6L^2-0.5L^3 Q=quality of output per week L= number of worker a. When dose the law of diminishing returns take effect? b. Calculate the wage of the values for labor over which stage I, II, and III occurs. C. Assume each worker is paid $10 per hour a

Externalities, Public Goods, Imperfect Information, and Social Choice

1. Which of the following industries would you classify as an oligopoly? Which would you classify as monopolistically competitive? Explain your answer. If you are not sure, what information do you need to know to decide? a. Athletic shoes b. Restaurants c. Watches d. Aircraft e. Ice cream 1) How does a firm in an oligo

Using Weighted Average Delay

A mail-order firm processes 5,000 checks per month. Of these, 65% are for $50 and 35% are for $70. The $50 checks are delayed two days on average; the $70 checks are delayed three days on average. a. What is the average daily collection float? How do you interpret your answer? b.What is the weighted average delay? use the res

Value of Lockboxes

Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following: Average number of payments per day 400 Average value of payment $1,400 Variable lockbox fee (per transaction) $ .75 Daily interest rate

1 Economics Question

Can anyone help? I was trying to figure this one out but I can't figure out how you can determine the amount of employees needed without knowing how much the employer is willing to pay a single employee. I don't know, it is just confusing to me. Does anyone out there have a clue, because I don't. Common sense would tell you t

Different types of costs

Determine the difference between Total Variable Costs (TVC), Average Variable Costs (AVC) and Marginal Costs (MC). What do we mean by these different types of costs? How are they calculated? What would be an example of each?

Heckscher-Ohlin theory

Please Provide an Elaborate answer as long as possible. I need to understand these concepts for future exams and i cannot answer such questions. (a) Explain what is meant in the Heckscher-Ohlin theory by (i) The relative factor intensity of a commodity, (ii) the relative factor abundance of a country. (b) How ar

Explain why productivity gains are so important to GM

Assume labor costs are 17.5% of revenue per vehicle for General Motors. In union negotiations during the late 1990s, GM attempted to cut its workforce to increase productivity. Together with the job reductions they planned, GM officials hoped to make the company's North American operations fully competitive with its U.S. and Ja

Perfectly Competitive Firm and Market Price

1. Government intervention may be required to correct market outcomes because of: a) externalities b) market power c) public goods d) all of the above 2. The optimal mix of output may not be produced by an economy because of the existence of: a) monopolies b) externalities c) public goods d) all of the abo


An oligopoly exists with two firms, A and B. The demand function for these oligopolists is Q=1000-40P. a. If firm A's cost function is TC=3000+7Q, what quantity (Qa) will it produce and price (Pa) will it charge to maximize profits? b. If firm B's cost function is TC=3000+5Q, what is this firm's profit or loss? c. Which


(Prob. 1: Productivity) A company has introduced a process improvement that reduces processing time for each unit, so that output is increased by 25% with less material, but one additional worker required. Under old process, five workers could produce 60 units per hour. Labor costs are $12/hour, and material input was previou

Finance - Merger gains, Mergers and P/E Ratios, Stock versus Cash Offers.

6. Merger Gains. Acquiring Corp. is considering a takeover of Takeover Target Inc. Acquiring has 10 million shares outstanding, which sell for $40 each. Takeover Target has 5 million shares outstanding, which sell for $20 each. If the merger gains are estimated at $25 million, what is the highest price per share that Acquiring

Material quantity variance

See attached file for full problem description. You have just been hired as a managerial accountant. You are responsible for variance analysis for direct materials required in the manufacturing of polo mallets. An old college friend called and asked you to lunch. You raced out the door before finishing the cost analysis fo

Determine whether to sell or process further

See attached file for full problem description. E6-7 Shynee Minerals processes materials extracted from mines. The most common raw material that it processes results in three joint products: Sarco, Barco, and Larco. Each of these products can be sold as is, or it can be processed further and sold for a

Your manager comes in with three sets of Laurentia, Rodinia, Ediacaran faunas.

Your manager comes in with three sets of proposals for a new production process. Each process uses three inputs: land, labor, and capital. Under proposal A, the firm would be producing an output where the MPP of land is 30, labor is 42, and capital is 36. Under proposal B, at the output produced the MPP would be 20 for land, 35