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Output & Costs

Maximizing Profits - Demand and Marginal Revenue Curves

The (inverse) demand curve for the services of Oakland Pest Control Co. (OPCC) is given by P = $1000 - 2Q, where P is in dollars, and Q is residences/month. The cost equation is given by C = 2000 + 30Q. a. Sketch and label OPCC's demand and marginal revenue curves, and determine the maximum revenue it can make. b. Wh

What are brand extensions?

Are brand extensions an important brand-growth strategy or can they endanger brands? Perhaps start with a definition of brand extensions?

Pottery Super Center Statement and Competitive Firms Equation.

Economy 4-1,2. (1)Which of the following statements is an example of a firms implicit costs? (a) For Pottery Super Center to stay in business, it must pay its cashiers $100 per day of work. (b) In order for Smoothie Giant to create Superboy smoothies with its blenders, it must give up the opportunity to use those bl

Graphing Cost Curves: AFC, AVC, ATC and MC

Illustrate the AFC, AVC, ATC, and MC curves on a diagram and show that marginal cost intersects average total cost at the minimum of average total cost. Use the excel file I uploaded as a reference for the graphs.

Analyze the given cost and demand equations.

Addis Music Company of D.C. enjoys an exclusive copyright for music written by KuKu, a legendary African Reggie group. Total revenue and cost for the group is as given below: C=f(Q)=880+0.25Q+0.0025Q^2 P=20.25-0.01Q P (the second equation) is the inverse demand curve. it is also the price (thus = P(Q) C is total cost Q

Calculating Net Present Worth

Buying A Boat: A Commercial Fisherman needs to purchase a new boat. He is considering three alternatives A, B & C. Boat A costs $200,000. and is expected to produce net revenues of $50,000 per year. Boat B costs $290,000 and is expected to produce net revenues of $75,000 per year. Boat C costs $225,000 and is expected to p

Repaving Deposit

In developing a subdivision, the developer is required to build the roads to the city building code specifications and to deposit an amount which will allow the city to repave the roads every four years for an indefinite period of time. The costs to construct the roads are $25,000 and $4,000 each time repaving is required. Th

Deciding Between New Equipment Options

A refuse recycling operation is considering installing some additional magnetic sorting equipment which will protect the processing equipment from damage. Three alternative systems have been identified, each of which is estimated to save the company $1,200 each year. The lifetime of each alternative is estimated to be 15 years.

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

Accounting and Economic Costs and Profits

Which of the following is (are) true? a. Accounting costs genearlly underestimate economic costs b. Accounting profits generally overstate economic profits c. In the absence of any opportunity costs, accounting profits equal economic profits d. All of the statements associated with this question are correct

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

You are the manager of a monopolistically competitive firm

You are the manager of a monopolistically competitive firm. The inverse demand for your product is given by P=200-10Q and your marginal cost is MC=5+Q. A. What is the profit-maximizing level of output? B. What is the profit-maximizing price? C. What are the maximum profits? D. What do you expect to happen to the demand for your

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

Operations Decision

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

Optimal Output for Short-Run Profit Maximization

Why is the optimal level of output for short-run profit maximization equal to that level where marginal revenue equals marginal cost? What is the mechanism that will push firms to this level of output?

Is the firm minimizing costs? What steps can lower costs?

A firm uses two variable inputs, labor, L, and raw materials, M, with typically shaped isoquants. It pays $20 per hour for L and $5 per unit for M. At the current mix of L and M, the marginal products of L and M are: MPL = 20 MPM = 4 Is the firm minimizing costs? If not, what steps should it take to lower costs and sti

Production Possibilities Frontier Conditions

1. Explain the connections between opportunity cost and the production possibilities frontier ? 2. What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced ? 3. When economists state that the opportunity cost of

This post addresses John's pizza shop and economic decisions

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

Firm Equity Percentage

The Shoe Outlet has paid annual dividends of $0.65, $0.70, $0.72, and $0.75 per share over the last four years, respectively. The stock is currently selling for $26 a share. What is this firm's cost of equity percentage?