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Output & Costs

Average total cost is

Average total cost is a. the change in cost divided by the change in output b. total cost divided by output c. the change in output divided by the change in costs d. total cost times output my answer is A when an increase in the firm's output reduces its long run average cost, it experiences a. economic of scale b.


Your division is considering two projects with the following net cash flows: year Project A Project B 0 (25) (20) 1 5 10 2 10 9 3 17 6 a) What are the projects' NPVs,

Relationship between P > AVC and a firm's contribution margin

2a) Explain the relationship between P > AVC and a firm's contribution margin, when a firms is making a decision to shut down operations. 2b) Knowing that a profit maximizing firm would follow the MR = MC rule and in case of a perfect competitor P = MC rule; If a perfectly competitive firm has the following cost f

Competitive markets

1a) What are the characteristics of a Perfectly Competitive Market? 1b) What are the Characteristics of a Monopoly? 1c) Discuss why the demand curve faced by a Perfect Competitor is assumed to be perfectly elastic and that of a Monopolist less elastic.

Cost types

Distinguish between the following types of costs: a) Historical Cost and Replacement Cost b) Opportunity cost and out-of-pocket cost c) Incremental cost and Sunk cost

Profit, Cost, Competition

Please see the attached file. MATCHING: Place only one letter in each space and use any one letter only once. One point each. ____ 1. Cause of increasing long-run A. Normal Profit average total costs


9. When a firm earns a normal profit, its revenue is just enough to cover both its ____________ cost and its ___________ cost. a. accounting; opportunity b. accounting; replacement c. historical; replacement d. explicit; accounting


A fashion firm makes outfits using two inputs, design skills( L) and expensive materials (M). The cost of fabrication is small and may be ignored as a first approximation. At current output levels, the unit input costs are: CL =£20 and CM =£4. The marginal products are: MPL =50: MPM =8. Is the firm operating efficiently i

Production Function (Capital/Labor) Ratio

Can you please give some hints, even if you can't help with the final solution. Thank You! Given the production function Q= 100(L^0.5)(K^0.5), where L = labor hours per unit time, K=machine hours per unit time, and Q=output per unit time. 1. If the price of capital and labor are equal, will the K/L ratio along the expansio

Allocating Production Resources at American Company

#1) An American Company that sells consumer electronics products has manufacturing facilities in Mexico, Taiwan, and Canada. The average hourly wage, output, and annual overhead cost for each site are as follows: Mexico Taiwan Canada Hourly wage rate

Average Cost

Assuming this firm is a short-run profit-maximizer or loss-minimizer. which statement best describes its present situation? See attached file for full problem description.

Pricing and Output

Suppose three firms face the same total market demand for their products. The demand is P Q $80 20,000 70 25,000 60 30,000 50 35,000 Suppose further that all three firms are selling their product for $60 and each has about one-third of the total market. One of the firms, in an attempt to gain market share at the

Marginal Cost-Revenue

In economics, when you plot cost and revenue on the Price-Quantity axis, the profit maximization condition is when marginal cost is equal to marginal revenue. This is a crucial notion to understand. Without it one can't effectively analyze profits. Does this make sense?

Maximization of Profits

It costs Dan's company C(x) = x^2 - 3x + 64 dollars to produce x items. The selling price (p) when x hundred units are produced is p(x) = (44 - x)/4. Determine the level of production (# of items produced) that maximizes profit.

Demand Function

The Demand Function for a product can be as Q=400-2P. We would have a fixed cost for this product as 200 and our variable costs are 0.5 per unit. Please let me know the equation for the profit. When is profit maximized? What is the maximum profit?

Estimations of production

a. Calculate the marginal product of labor. b. At what point does diminishing returns set in? c. Calculate the average product of labor. d. Find the three stages of production. See attached file for full problem description.

Price/Output Determination and Competition

Price/Output Determination. Tallahasse Cars Unlimited, Inc., a rapidly expanding new entrant to this area, is considering two proposals for the provision of its cosmetic detailing of cars (washing, waxing, polishing, engine cleaning, etc.). First, a large janitorial agency with some experience in the detailing of cars has offe

Profit Maximization

Fill in the missing data for price (P), total revenue (TR), marginal revenue (MR), total cost (TC), marginal cost (MC) profit (ח) and marginal profit (Mח) in the following table. See attached file for full problem description. A. At what output (Q) Level is profit maximized? B. At what out put (Q) level is re

Price and Output Determination

Price/Output Determination Cold Case, Inc., produces beverage containers used by fast food franchises. This is a perfectly competitive market. The following relation exists between the firm's beverage container output per hour and total production costs: Total Total Output Cost 0 $

Monoply Profit

Pavati Fluid Controls, Inc, (PDC) is a major supplier of reverse osmosis and ultra-filtration equipment, which helps industrial and commercial customers achieve improved production processes and a cleaner work environment. The company has recently introduced a new line of ceramic filters that enjoy patent protection. Are relev

Comparing human capital ROI

The problem is attached. The part about human capital/Becker shouldn't confuse you, this is no different than if it were in a finance class. Becker just says that we can think of education as in investment in "human capital" since it will increase our earnings later in life - but to be rational that investment has to pay off mor

Marginal Analysis

26. Which of the following sets of economic data is minimizing the cost of producing a given level of output? a) MPL = 20, MPK = 40, W = $32, r = $16. b) MPL = 20, MPK = 40, W = $16, r = $32. c) MPL = 40, MPK = 20, W = $16, r = $32. d) MPL = 40, MPK = 40, W = $16, r = $32. 28. It is profitable to hire labor so long as

Unifying Concepts Question

Julie Kowalis, an investment analyst, wants to know if her investments during the past four years have earned at least a 12% return. Four years ago, she had the following investments: a. She purchased a small building for $50,000 and rented space in it. She received rental income of $8,000 for each of the four years and then

Weighted average cost of capital

United Business Forms' capital structure is as follows: Debt-35% Preferred stock-15% Common equity-50 The aftertax cost of debt is 7 percent, the cost of preferred stock is 10 percent, and the cost of common equity (in the form of retained earnings) is 13 percent. Calculate United Business Forms' weighted average cost

Derivative Strategy - Call and put options

Consider the following table of American option prices of ABC Company at some date when the stock was selling at $80.50. All options expire one month later. Strike price Market price of call Market price of put 80 2.50 2.20 85

Monopoly and Calculate Q Values

Microeconomics sixth edition, Pindyck-Perferred format for answer is either Word or Excel. Chapter 10 Page 379 Problem 8 A firm has two factories, for which costs are given by: Factory #1 C1(Q1) = 10Q 2 1 Factory #2 C2(Q2) = 20Q 2 2