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# Output & Costs

### Production Cost Calculations: Production And Perfect Competition

A firm currently uses 50,000 workers to produce 200,000 units of output per day. The daily wage per worker is \$80, and the price of the firm's output is \$25. The cost of other variable inputs is \$400,000 per day. Although you do not know the firm's fixed cost, you know that it is high enough that the firm's total costs exceed it

### Monopoly output and dead weight loss

Suppose that a firm has a monopoly on a good with the attached demand schedule: a. what price and quantity will the monopolist produce at if the marginal cost is a constant \$4? b. Calculate the dead weight loss from having the monopolist produce, rather than a perfect competitor.

### Perfect Competition

Cost figures for a hypothetical firm are given in the attached spreadsheet. Use them for the exercises below. The Firm is selling a perfectly competitive market. a. fill in the blank columns b. What is the minimum price needed by the firm to break even? c. What is the shutdown price? d. At a price of \$40, what ouput level

### Marginal Output and Productivity

Imagine there are 100 firms in a perfectly competitive industry. Each produces an output, q, using labour L and capital K according to the following short-run production function: q = 5 + 4L - .25L2 + K Each firm currently has five units of K. The price of each worker is \$50 per day. The price of capital, K, is \$100 per day. S

### Average and marginal cost schedules

Given the following total-cost schedule: Q 0 1 2 3 4 TC 1 12 14 15 20 Derive the average- and marginal-cost schedules. Please explain answers and show work.

### Prices in perfect competition

Wheat is produced under perfectly competitive conditions. Individual wheat farmers have U- shaped,long run average cost curves that meet the marginal cost curves when 800 bushels are produced and the marginal cost at that output level is \$4 per bushel. If the market demand for wheat is given by Q = 2 400 000 - 200 000p, what wo

### Accept the Order: Decisions

7. General Medical makes disposable syringes for hospitals and doctor supply companies. The company uses cost-plus pricing and currently charges 150 percent of average variable costs. General Medical learned of an opportunity to sell 300,000 syringes to the Department of Defense if they can be delivered within three months at

### Demand Function for Certified Product

A product you produce has the following annual demand function: P = 90 -0.003Q The marginal cost of producing the product is \$30. If the firm pays a fee of \$50,000 to the General Drug Research Council, it can have its product's effectiveness certified. The demand function for a certified product is expected to be P

### Monopolist

One and Only, Inc., is a monopolist. The demand function for its product is estimated to Q = 60 - 0.4P + 6Y +2A where Q = quantity of units sold P = price per unit Y = per capita disposable personal income (thousands of dollars) A = hundreds of dollars of advertising expenditures

### Soft Selling Adverse selection question Soft selling occurs when a buyer is skeptical of the quality or usefulness of a product or service. For example, suppose you're trying to sell a company a new accounting system that will reduce costs by 10%. Instead of asking for a price,you offer to give them the product in exchange for 50% of their cost savings. Describe the information asymmetry, the adverse selection problem,and why soft selling is a successful signal. Chapter 16 of Book: Managerial Economics: A Problem Solving Approach Authors: Luke M. Froeb and Brian T. McCann

Soft Selling Adverse selection question Soft selling occurs when a buyer is skeptical of the quality or usefulness of a product or service. For example, suppose you're trying to sell a company a new accounting system that will reduce costs by 10%. Instead of asking for a price,you offer to give them the product in exchange

### QUESTION ON SHORT RUN PRODUCTION

10. The following table summarizes the short-run production function for your firm. Your product sells for \$5 per unit, labor costs \$5 per unit, and the rental price of capital is \$20 per unit. Complete the following table, and then answer the accompanying questions. (1) (2) (3) (4) (5) (6) (7) K L Q MPK APK APL VMPK 0 5 0

### Market Value and Rankings

Firm Dividend Cost of Capital (\$ million) %/Year S1 10 8 S2 10 12 S3 10 14 B1 100 8 B2 100 12 B3 100 14 a. Calculate market value of each firm using cost of cap. b. Rank 3 S by market value & note how cost of cap is ordered. What is the expected return for a self financing portfolio. c. Rank all

### Determining Total Cost, Revenue, Profits and Output: Example

Please see attached for graph and help determine the following questions: 1. What would be the total cost? 2. What would be the total revenue? 3. What would be the total profits? 4. Looking at the graph, if the monopolistic firm were to behave like a perfectly competitive firm (operating in the long run), what would th

### Cost analysis and estimation

Suppose The Big Enchilada Restaraunt has been offered a 1 year binding lease agreement for \$5200/mth on an attractive site. Before the lease is signed, what is the incremental cost per month? After the lease aggreement has been signed what is the incremental cost per month? Explain.

### Description of Marginal Cost

Southwest Airlines offers 4 flights per week day from cleveland, Oh to Tuscon, Az. If adding a 5th flight per week day would cost \$15,000 per flight, or \$110 per available seat, calculate the incremental costs bourne by Southwest following a decision to go ahead with a 5th flight per day for a minimal 60-flight trial period. Wh

### You've been hire by an unprofitable firm to determine whether it should shut down

The firm currently uses 50,000 workers to produce 200,000 units of output per day. The daily wage (per worker) is \$80, and the price of the firm's output is \$25. The cost of other variable inputs is \$400,000 per day. Although you don't know the firm's fixed cost, you know that it is high enough that the firm's total costs exceed

### Finance

Please see the attachment. 1) You are in the process of purchasing a used min-van that will cost you \$12,899. The dealership is offering you either a \$500 rebate (applied toward the purchase price) or 2.9% financing for 60 months (with payments made at the end of the month). You have been pre-approved for an auto loan

### Cost Schedules

2. Given the following total cost schedule of a firm, (a) derive the total fixed cost and total variable cost schedules of the firm, and from them derive the average fixed cost, average variable cost, average total cost, and marginal cost schedules of the firm. Q 0 1 2 3 4 5 TC 30 50 60 81 118 180

### Cost Analysis

The Goldberg-Scheinman Publishing Company is publishing a new managerial economics test for which it has estimated the following 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:

### Cost Analysis

I am terrible at this subject. I cannot figure out where to start with this problem. The book is no help to me at all. Airway Express has an evening flight from Los Angeles to New York with an average of 80 passengers and a return flight the next afternoon with an average of 50 passengers. The plane makes no other trip. The c

### Breakeven Level and Degree of Operating Leverage: Tetrangle

Tetrangle Manufacturing has fixed costs of \$2,160 per day. The firm manufactures bicycle component upgrade kits. The kits have a short-run average variable cost of \$48 and are sold for \$66 each. (a) What is the breakeven level of daily output for the firm? (b) What is the degree of operating leverage when daily output is

### Profit and Loss

1. The Global Marketing Group, LLC operates in a monopolistic competitive industry with the following Cost and Revenue data: Average Total Cost = \$5.00; Quantity sold = 5000 Units; Average Revenue = \$9.00; Marginal Revenue = \$4.00; Marginal Cost = \$4.00: (a) What is the profit maximizing output level for the firm? (b) W

### Market Structure

The Global Investment Group, LLC operates in a perfectly competitive industry with the following Cost and Revenue data: 1. Average Total Cost = \$250; Quantity sold = 7000 Units; Average Revenue = \$200; Marginal Revenue = \$200; Marginal Cost = \$200: (a) What is the loss minimizing output level for the firm? (b) What is t

### Cost Analysis

The ARA Railroad owns a piece of land along one of its right-of-ways. The land originally cost ARA \$100,000. ARA is considering building a new maintenance facility on this land. ARA determined that the proposal to build the new facility is acceptable if the original cost of the land is used in the analysis, but the proposal d

### Managerial Economics: Company's Profits

Please guide through the steps of these problems (see attachment).

### Microeconomics: Market Structure Questions

1. Firms under perfect competition receives zero profit, because a. There are too many firms to compete. b. There are no barriers to entry. c. There is complete information. d. The firms' products are identical. e. All of the above. 2. Under perfect competition, a firm maximizes its profit by setting a. P = MC because P

### determine the present value

An owner can lease her building for \$100,000 per year for three years. The explicit cost of maintaining the building is \$35,000, and the implicit cost is \$50,000. All revenues are received, and costs are borne, at the end of each year, if the interest rate is 4 percent, determine the present value of the stream of: A. Accoun

### Customer feedback Critical Path

QUESTION: PERT/CPM TECHNIQUES Company A is installing a Web-based customer-feedback system to meet customer needs for quick response when rolling out new products. A new product line is rolling out in 34 weeks and the customer-feedback system must be installed and running in time for the new product launch. Table 1.1 in the a

### How do the CPI and the GDP deflator differ

1. How do the CPI and the GDP deflator differ? Why do economists believe that the CPI overstates the rate of inflation? Is this an important problem? 2. What is the connection between an increase in government purchases and the trade deficit? (Explain how the former affects the latter.)

### Marginal Costs Problem (See attached)

Exercise 1 (Marginal Costs): Kevin's Majestic Cookies (See attached) I could use help on figuring out how to start and finish this assignment. Please post directions in order to aid me on the direction of the answers. Please graph the last portion.