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# Output & Costs

### Goods and Services

Prices, Output and Strategy: - Pick a good or service you are familiar with. Speculate how the price for that good or service may have been set and how well this price maximizes profit for the company and determine what shifts the company should make in its pricing strategy. Provide support for your recommendations. - Discuss

### Fixed Cost Vs. Variable Cost

Can you help me explain this fixed and variable cost problem? I am not too sure how to go about answering this question. Problem: Organizations typically have high or low fixed costs. It is important to understand the difference between these two types of organizations and how their business decisions differ. One organizatio

### Total Cost, Average Cost, Variable Cost, and Average Variable Cost

Your firm currently uses 69 workers to produce 300 units of output per day. The daily wage (per worker) is \$100, and the price of the firm's output is \$30. The cost of other variable inputs is \$100 per day. Fixed costs are \$2100 per day. What is total cost (TC)? What is average cost (AC)? What is variable cost (VC)? What is aver

### Private and Public Goods and Optimal Output

1. Suppose point A represents the optimal mix of output, that is, the mix of private and public goods that maximizes society's welfare. Because consumers won't demand purely public goods in the marketplace, the price mechanism won't allocate so many resources to their production. Instead the market will tend to produce a mix of

### Demand Curves and Price Determination

Suppose an airline flying on the New York - Chicago route has estimated the demand curves for three different types of customers: business (no advance purchase), leisure (7 day advance purchase), and discount (14 day advance purchase) travelers. They are: Business: P = 600-Q and MR = 600-2Q; Leisure: P = 500-2Q and MR = 5

### Politics and underestimating actual costs

Suppose the military bureaucracy consistently misinforms Congress on the total costs of producing military hardware. Assume that it underestimates the actual costs and that the political representatives believe these estimates. How is this likely to cause a loss in efficiency? What are the efficient outputs of military hardware

### Effect of Fixed Costs on Revenue

Say you are the manager of a perfectly competitive firm selling a t-shirts for restaurant advertisement. Your business is making a loss because total revenue is less than total costs. What would you do - shut down or continue to operate? Use hypothetical numbers to explain. Information you need to provide include - state the pro

### Demand and revenue problems

Price ; Quantity Demanded \$200 ; 1000 \$150 ; 1400 \$100 ; 1800 If price falls from \$200 to \$150, what is the elasticity of demand over this range? A. -0.625 B. -1.0 C. -1.17 D. -2.5 E. -3.0 As output increases from 1,000 to 1,400 what is marginal revenue? A. \$25 B. \$50 C. -\$400 D. -\$25 E. -\$75 If price fal

### Quality of Care

There exists what has been termed the triangle of healthcare. The three sides are: (a) cost, (b) access, and (c) quality. What is this triangle and the relationship of the three aspects? How does each one dramatically influence the others?

### Calculate the NPVs of each Project.

Use MS Excel for your calculations. The following is a list of four projects that Capital Corporation must choose from for the coming year: Project Project Price Annual Net In?ows A 700,000 118,861 B 670,000 109,039 C 184,000

### Managing A Small Manufacturing Facility

You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below. No. of workers Total Labor Cost Output Total Revenue 1 \$145 100 \$190 2 290

### Dealing with Competition Models

Given the following: P = 20,000 - 15.6Q and TC= 400,000 +4640Q + 10Q2 where P is the product price, Q is the output level, and Q2 is Q squared A. Given we have a monopoly due to a patent, determine the profit maximizing output level, the monopoly price, and economic profits(High price/high output model). B. Assuming

### Operations Decision (Fictitious restaurant industry)

Assume you have been hired as a managing consultant by a company to offer some advice that will help it make a decision as to whether it should shut down completely or continue its operations. It currently uses 100 workers to produce 6,000 units of output per month (working 20 days / month). The daily wage (per worker) is \$70, a

### Is John's reasoning valid in an economic sense

When measuring costs, it is important to keep in mind of one of the Ten Principles of Economics: The cost of something is what you give up to get it. The opportunity cost of an item refers to all those things that must be forgone to acquire that item. When economists speak of a firm's cost of production, they include all the opp

### In a competitive market, the market-determined price is \$25

In a competitive market, the market-determined price is \$25. For a typical firm producing 10,000 units of output, the firm's average cost reaches its minimum value of \$25. Is this firm making the profit-maximizing decision? If not, what should the firm do? Question 8 answers No, it is not making the profit-maximizing decis

### Two-parts tariff

A monopolist produces output with constant marginal and average cost of 10 \$. There are two types of consumers (in equal numbers) that are potentially in the market for the good. Consumers of type A have a demand function of QA = 60 - PA , and consumers of type B have a demand function of QB = 60 -2PB. a. Suppose that the mon

### Economic Output Variables

Hernandez Corp. uses two variable inputs, X and Y, to produce its final product, canoes. Its engineering department has estimated the marginal product functions for inputs X and Y as follows: MPx = Y/X MPy = 4 X/Y Where X and Y denote, respectively, the quantity in hours of inputs X and Y used. At present Hernandez Corp.

### Profit Mazimization

Output Price Total Cost Total Revenue Marginal Revenue Marginal Cost Profit 0 \$1,900 \$1000 1 \$1,700 \$2000 2 \$1,650 \$2800 3 \$1,600 \$3500 4 \$1,550 \$4000 5 \$1,500 \$4500 6 \$1,450 \$5200 7 \$1,400 \$6000 8

### Revenue (demand) and cost situation facing an individual firm

Please see attached. 8. Assume the table above shows the revenue (demand) and cost situation facing an individual firm. Further assume this firm has a Total Revenue equation that can be expressed as TR = 20Q. Based on that, answer the following. A. In the table above, fill in the missing values for Price, Total Revenue, Mar

### Jernigan Jerseys is a wholesaler distributing various NFL, NBA, and MLB style jerseys of various quality to minor league and non-professional teams. Two weeks ago they sold 25 jerseys on account to the Canton Catfish varsity football team in Canton, Mississippi for \$45 each with an inventory cost of \$28 each. Last week seven of the jerseys were returned to Jernigan by Canton as the player's names were misspelled and have already been replaced through a different vendor. If Jernigan uses the perpetual inventory method, what would be the journal entry (or entries) to put these seven jersey's back into inventory and to adjust the Canton Catfish account. Jernigan Jerseys DATE Account Name Post Ref DEBIT CREDIT 1 Accounts Receivable \$1,125 Sales \$1,125 Cost of Goods Sold \$700 Merchandise Inventory \$700 2 Accounts Receivable \$1,825 Sales \$1,825 3 Sales Returns & Allowance \$315 Accounts Receivable \$315 Merchandise Inventory \$196 Cost of Goods Sold \$196 4 Accounts Payable \$315 Cash \$315 Answer A. Item # 1 is the correct journal entry B. Item # 4 is the correct entry C. Item # 2 is the correct journal entry D. Item # 3 is the correct entry

Jernigan Jerseys is a wholesaler distributing various NFL, NBA, and MLB style jerseys of various quality to minor league and non-professional teams. Two weeks ago they sold 25 jerseys on account to the Canton Catfish varsity football team in Canton, Mississippi for \$45 each with an inventory cost of \$28 each. Last week seven o

### Withers Florist has been looking at purchasing a computerized accounting information system package to help manage accounting data once their bookkeeper retires in April. Withers is a 37 year-old, small, family-owned florist with average annual sales of \$360,000. D. Withers (the owner) recently attended a software expo in Montgomery, Alabama and looked at a package called FlowerPower2011 that is specifically written for floral retailers and wholesalers with a basic package starting price of \$266,000. Additional software/hardware options can push the total computer package (including installation) to \$318,420 but the basic version is very powerful for data management and reporting. However, the computer software/hardware packages aren't expected to increase sales by any significant amount. If Mr. Withers decided to purchase the FlowerPower2011 package he will be violating which of the following AIS principles? Answer A. Cost-Benefit Principle B. Compatibility Principle C. Relevance Principle D. Control Principle

Withers Florist has been looking at purchasing a computerized accounting information system package to help manage accounting data once their bookkeeper retires in April. Withers is a 37 year-old, small, family-owned florist with average annual sales of \$360,000. D. Withers (the owner) recently attended a software expo i

### Please match the following transactions for CMC (Calrissian Mining Company) with the appropriate special journal. Answer - Calrissian purchased \$1,800 of merchandise on credit from Fett Co., terms n/15 - Calrissian paid salaries \$87,425 in cash - Calrissian sold merchandise costing \$1,492 on credit to Organa Industries for \$1,776, subject to a \$55 sales discount if paid by the end of the month. - Empire (a new partial owner in CMC) contributed \$16,800 cash to the company Which one of the statements do the following go to.. A. Purchases Journal B. Cash Disbursements Journal C. Sales Journal D. Cash Receipts Journal

Please match the following transactions for CMC (Calrissian Mining Company) with the appropriate special journal. Answer - Calrissian purchased \$1,800 of merchandise on credit from Fett Co., terms n/15 - Calrissian paid salaries \$87,425 in cash - Calrissian sold merchandise costing \$1,492 on credit to Organa Industries for

### An airline transportation consultant offers the CEO of BlueStar, a struggling commercial airline company, the following advice concerning the airline's high operating costs in the current quarter: You don't have enough aircraft to operate efficiently. However, at some point in the long run, you will have the opportunity to add aircraft to your fleet in order to reduce your total costs and still carry the same passenger load. Does this advice make any sense? In the long run, how can BlueStar's total costs fall by adding more aircraft to its fleet? Must BlueStar experience economies of scale for the consultant's advice to be correct?

An airline transportation consultant offers the CEO of BlueStar, a struggling commercial airline company, the following advice concerning the airline's high operating costs in the current quarter: You don't have enough aircraft to operate efficiently. However, at some point in the long run, you will have the opportunity to add a

### Using the PPF to model the Cold War

We can use the PPF model to analyze an "Arms Race" between nations to understand and interpret important political events in history. Draw a PPF for military goods and civilian goods production (similar to the traditional example of "guns versus butter"). Then draw another PPF for a country that is about twice the size of the

### Economics

The WSJ recently presented data suggesting that United Airlines was not covering its costs on flights from San Francisco to Washington D.C. The article quoted analysis saying that United should discontinue this service. The costs per flight (presented in the article) included the costs of fuel, pilots, flight attendants, food, e

### Pricing and Output Decisions: Perfect Competition and Monopoly

Following is the graphical representation of a short run situation faced by a perfectly competitive firm. Is this a good market for this firm to be in? Explain. What do you expect will happen in the long run? Explain. See the attachment for graph.

### Optimization: output, marginal cost, average cost, price

Please help with the following problem. Optimization: Giant Screen TV, Inc, is a manufacturer and distributor of high-resolution 50-inch television monitors and consoles for individual and commercial customers. Revenue and cost relations are: TR = \$4,500Q - 0.1Q^2 MR = \$4,500 - 0.2Q TC = \$2,000,000 + \$1,500Q + 0.5Q^2 MC

### Pricing and Output Decision Making

Respond to the following: a. In certain industries, firms buy their most important inputs in markets that are close to perfectly competitive and sell their output in imperfectly competitive markets. b. Cite as many examples as you can of these types of businesses. c. Explain why the profits of such firms tend to increase wh