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.)
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.
Please refer attached file for diagram. The accompanying diagram shows the demand, marginal revenue and marginal cost of a monopolist. a.Determine the profit maximizing output and price. b. What output and price would prevail if the product was sold by price taking firms in a perfectly competitive market? c. Calculate
Between 1995 and 1997, American Airlines competed in the Dallas/Fort Worth Airport against several other low-cost carriers. In response to these low-cost carriers, American Airlines reduced its price and increased service on selected routes. As a result, one of the low-cost carriers stopped service, which led American Airlines t
Two partners who own Progressive Business Solutions, which currently operates out of an office in a small town near Boston, just discovered a vacancy in an office building in downtown Boston. One of the partners favors moving downtown because she believes the additional business gained by moving downtown will exceed the higher r
Clinton Co. has just paid a dividend of $2.50 per share. The dividends are expected to grow at a constant rate of 6% per year for ever. If the stock is currently selling for $50 per share, calculate the cost of equity for the firm.
You are the manager of a firm that has an exclusive license to produce your product. The inverse market demand curve is P = 900-1.5Q. Your cost function is C(Q)=2Q+Q^2. Determine the output you should produce, the price you should charge, and your profits.
I am exploring the option of starting my own business. In addition to creating a business plan (which I am not quite sure how to do), I am reviewing factors and costs. What should be the 10 most important factors and costs and further, name 3 implicit and 3 explicit costs to consider. I have what I believe to be good options
Cost-Plus Pricing. Wendel Stove Company is developing a "professional" model stove aimed at the home market. The company estimates that variable costs will be $2,000 per unit and fixed costs will be $10,000,000 per year. Required a. Suppose the company wants to set its price equal to full cost plus 30 percent. To determine
It has been proposed that natural monopolists should be allowed to determine their profit maximizing outputs and prices and then government should tax their profits away and distribute them to consumers in proportin to their purchases from the monopoly. Is this proposal as socially desirable as requiring monopolists to equate pr
The fixed costs at Harley Motors are $1 million annually. The main product has revenue of $8.50 per unit and $4.25 variable cost. Determine the following. (a) Breakeven quantity per year. (b) Annual profit if 200,000 units are sold and in 350,000 units are sold. Plot total revenue and costs at these leve
In the 1990s the Mobil Oil Corporation acquired the rights to increase their pollution by 900 pounds of sulfur-dioxide per day at their Torrance, California refinery. These rights were purchased from South Gate, California, at a price of $3 million after the latter acquired them from General Motors. As a result of this change, M
In the 1990s the Mobil Oil Corporation acquired the rights to increase their pollution by 900 pounds of sulfur-dioxide per day at their Torrance, California refinery. These rights were purchased from South Gate, California, at a price of $3 million after the latter acquired them from General Motors. As a result of this change, M
Suppose the external marginal cost of pollution is MCext = 5Q and the internal marginal cost is MCint = 10Q . Further, assume the inverse demand for the product, Q, is given by P = 90-Q . a. What is the socially efficient level of output? b. How much output would a competitive industry produce? c. How much output would
Making dresses is a labor-intensive process. Indeed, the production function of a dressmaking firm is well described by the equation Q=L-L^2/800, where Q denotes the number of dresses per week and L is the the number of labor hours per week. The firm's additional cost of hiring an extra hour of labor is about $20 per hour (wage
Common stocks issued by Henry Harmon Builders paid stockholders $0.93 per share on an average price of $18.80 last year. The company expects to grow the dividend rate at a maximum of 1.5% per year. The stock volatility of 1.19 is somewhat higher than that of other public firms in the construction industry,and other stocks in thi
Suppose that the production of crayons q is conducted at 2 locations and uses only labor as an input. The production function in location 1 is given by q1=10L1 1/2(exponent) and location 2 by q2=50 L2 1/2(exponent). a. If a single firm produces crayons in both locations, then it will obviously want to get as large an output a
The estimated annual cash flows for a proposed city governement project are costs of $450,000 per year, benefits of $600,000 per year, and disbenefits of $100,000 per year. Determine the (a) B/C ratio and (b) value of B - C. Need to show excel formula
The firm currently uses 50,000 workers to produce 200,000 units of output per day. The daily wage worker per worker is $80.00, and the price firm is $25.00. The cost of other variables input 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 cost exceeds its
Please show your work so I can gain an understanding of the process. Thanks
What is average productivity? What is marginal productivity? Explain the relationship between marginal and average productivity. What would happen to marginal and average productivity if a technological innovation is introduced to the production process? Provide examples (numerical and graphical if you can) to explain your answe
The following production table provides estimates of the maximum amounts of output possible with different combinations of two input factors, X and Y. (Assume these are just illustrative points on a spectrum of continuous input combinations.) Units of Y Used Estimated Output per Day 5 184 265 334 395 440 4 176 248 303 3
Presented below are a number of accounting procedures and practices in Sanchez Corp. For each of these items, list the assumption, principle, information characteristic, or modifying convention that is violated. 1. Because the company's income is low this year, a switch from accelerated amortization to straight-line amortizatio
Swagelok Enterprises is a manufacturer of miniature fittings and valves. Over a 5-year period, the costs associated with one product line were as follows: first cost of $30,000 and annual costs of $18,000. Annual revenue was $27,000, and the used equipment was salvaged for $4000. What rate of return did the company make on this
Pro Sports Inc. manufactures basketballs for the National Basketball Association (NBA). For the first 6 months of 2008, the company reported the following operating results while operating at 90% of plant capacity and producing 112,500 units. Amount Sales $4,500,000 Cost of goods sold 3,600,000 Selling and adminis
Two methods can be used for producing expansion anchors. Method A costs $80,000 initially and will have a $15,000 salvage value after 3 years. The operating cost with this method will be $30,000 per year. Method B will have a first cost of $120,000, an operating cost of $8000 per year, and a $40,000 salvage value after its 3-yea
A consulting engineering firm is considering two models of SUVs for the company principals. A GM model will have a first cost of $26,000, an operating cost of $2000, and a salvage value of $12,000 after 3 years. A Ford model will have a first cost of $29,000, an operating cost of $1200, and a $15,000 resale value after 3 years.
The cost associated with maintaining rural highways follows a predictable pattern. There are usually no costs for the first 3 years, but thereafter maintenance is required for restriping, weed control, light replacement, shoulder repairs, etc. For one section of a particular highway, these costs are projected to be $6000 in year
1. Which of the following occurs if firms are able to restrict output and raise price? a. resources are misallocated b. wealth is shifted from consumers to government c. wealth is shifted from producers to consumers d. P = MC 2. Production by a monopoly would result in the socially optimal allocation of resources i
In a perfectly competitive industry, the market price is $25. A firm is currently producing 10,000 units of output, its average total cost is $28, its marginal cost is $20, and its average variable cost is $20. Given these facts, explain whether the following statements are true or false: a. The firm is currently producing