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Output & Costs

Maximizing profit in two distinct markets.

Ann McCutcheon is hired as a consultant to a firm producing ball bearings. This firm sells in two distinct markets, each of which is completely sealed off from the other. The demand curve for the firm's output in the first market is P1 =160 - 8Q1, where P1 is the price of the product and Q1 is the amount sold in the first market

Can you reduce the cost of producing pots by adding a pottery machine?

Your firm produces clay pots entirely by hand even though a pottery machine exists that can make clay pots faster than a human. Workers cost $80 per day and each additional worker can produce 20 more pots per day (i.e., marginal product is constant and equal to 20). Installation of the first pottery machine would increase output

Production function

Crew Brew produces a popular brand of beer in its mini-brewery located on a small river in Kentucky. It uses a special formula, combined with the fresh water from the local stream, to produce a drink popular with local folks and tourists who visit during the summer fishing season, and autumn deer hunting season. The production f

good x is produced in a competitive market using input a. Explain what would happen to the supply of good x in each of the following situations. A. the price of input a increases. b. an excise tax of $1 is imposed on good x. c. an ad valorem of 5% is imposed on good x d. a technological change reduces the cost of producing additional units of good x.

good x is produced in a competitive market using input a. Explain what would happen to the supply of good x in each of the following situations. A. the price of input a increases. b. an excise tax of $1 is imposed on good x. c. an ad valorem of 5% is imposed on good x d. a technological change reduces the cost of producing add

Explore total profits.

The Industry demand function for bulk plastics is represented by the following equation: P=800-20Q Where Q represents millions of pounds of plastic. The total cost function for the industry, exclusive of a required return on invested capital, is: TC=300+500Q+10Q^2 where Q represens millions of pounds of plastic a. If this in

trade volume; AVC; elasticity of cost

Power Brokers, Inc., a discount brokerage firm, is contemplating opening a new regional office in Providence, Rhode Island. An accounting cost analysis of monthly operating costs at a dozen of its regional outlets reveals average fixed costs of $4,500 per month and average variable costs of: AVC=$59-$0.006Q Where AVC is avera

Managerial economics

1. Industry studies often suggest that firms may have long-run average cost curves that show some output range over which there are economics of scale and a wide range of output over which long run average cost is constant; finally, at very high output there are diseconomics of scale a. draw a representative long run average

Economics: mosquito control exercise

Suppose there are only two individuals in society. Person A's demand curve for mosquito control is given by: [Note: let "_" denote a subscript] q_n = 100 - p for person B, the demand curve for mosquito control is given by: q_b 200 - p A. Suppose mosquito control is a pure public good; that is, once it is produced,

Demonstrate Hungarian method and EOQ.

In making inventory decisions, the purpose of the basic EOQ model is to minimize a. carrying costs. b. ordering costs. c. stock on hand. d. the sum of carrying costs and ordering costs. If the addition of a constraint to a linear programming problem does not change the feasible solution region, the constraint is said

Managerial Economics - El Dorado Star

The El Dorado Star is the only newspaper in El Dorado, New Mexico. Certainly, the Star competes with The Wall Street Journal, USA Today, and the New York Times for national news reporting, but the Star offers readers stories of local interest, such as local news, weather, high-school sporting events, and so on. The El Dorado Sta


Valuation Use the information provided to estimate the value of XYZ under each of the six assumptions. Assume that XYZ Company generated cash flows of $2.00 per share last year. XYZ's cost of capital is 12%. Estimate the value per share of XYZ for each of the following sets of assumptions. 1. No future growth is expected.

A short-run for a purely competitive market is examined.

In the short-run for a purely competitive market, a manufacturer will stop production when: the total revenue is less than total costs the contribution to fixed costs is zero or less the price is greater than AVC operating at a loss a and b

profit-maximizing output and price

Suppose that the (inverse) market demand curve for a new drug. Adipose-Off, designed to painlessly reduce body fat, is represented by the equation P = 100 â?" 2Q, where P is the price in dollars per dose and Q is the annual output. (The marginal revenue curve is thus given by the equation MR = 100 â?" 4Q.) Suppose also that th

long-run total cost and long-run average cost

The production engineers at Impact Industries have derived the optimal combinations of labor and capital (the only two inputs used by Impact) for three levels of output: 120, 180, and 240 units of output: Q L* K* 120 4 20 180 6 30 240 8 50 Q is the output level, L* is the optimal amoun

Production and Cost Analysis in the Short-Run

1. Given the output and Total Cost Data in the Table below, Complete the following columns: Variable cost , Fixed Costs, marginal Cost, Average Total Cost columns. Then on a graph, plot the marginal and average costs data. (Plot them on the same graph, not on two separate graphs). Then from the graph identify the level of out

Advanced pricing techniques

1)STIHL, Inc., manufactures gasoline-powered chain saws for professional, commercial, farm, and consumer markets. To â??better serveâ? their customers, STIHL offers its chain saws in four different quality lines and associated price ranges: occasional use, midrange, professional, and arborist. Under what circumstances could

Production Functions

Q=10L-.5L2+24K-K2 Marginal revenue production function? Optimal labor/capital values given a profit maximization goal? Price of labor: $40 Price Capital: $80 Output sells for $10

Question about Profit Mazimization

1. Use the following to calculate profit at each quantity of output. Total Total Output Price Revenue Cost (Q) (P) (TR) (TC) 0 $1,900 $ 0 $1,000 1 $1,700 $ 1,700 $2,000 2 $1,650 $ 3,300 $2,800 3 $1,600 $ 4,800

Economics problems

1a. Suppose a production function is given by F(K,L)=KL^2, the price of capital is $10 and the price of labor is $15. What combination of labor and capital minimizes the cost of producing given output? Explain. 1b. The production function for a product is given by q=100KL. If the price of capital is $120 per day and the pri

Analyzing output and price relationship in the given case

Give Me a Pane, Inc., distributes window glass to hardware and building supply chains located throughout the Northeast. Like several grain and commodity markets, the market for common single-pane glass is perfectly competitive. The company's technology defines a marginal cost per pound of single-pane glass given by the relation:

Marginal Cost is examined.

A company that produces luxury automobiles has the following simplified costs. What is the marginal cost of the second automobile? # of Automobiles.....Fixed Cost..........Total Variable Costs 0.......................$50,000............$0 1.......................$50,000............$10,000 2.......................$50,00

Marginal Cost and Marginal Revenue

The data below are for a competitive business (price-taker). Output Average Average Average Fixed Cost Variable Cost Total Costs Marginal Cost 0 $3,000 1 $3,000 $900 $3,900 $900 2 $1,500

Nominal GDP is examined.

1. When the slope of the average product curve equals zero: total product is maximized. returns to the variable input are increasing. marginal product equals average product. marginal product equals zero. Average product is very high but less than zero 2. At the point at which P=MC, s

GDP is examined.

A farmer grows wheat, which he sells it to a miller for $100.00. The miller turns the wheat into flour, which he sells to a baker for $150.00. The baker turns the wheat into bread, which he sells to consumers for $180.00. Consumers eat the bread. a.) What is GDP in this economy? Explain. b.) Value added is defined as the v

Pigouvian tax and externalities

The private marginal benefit for commodity X is given by 10 - X where X is the number of units consumed. The private marginal cost of producing X is constant at $5. For each unit of X produced, an external cost of $2 is imposed on members of society. In the absence of any government intervention, how much X is produced? What is

Micro Theory: q = KL + L

A firm has the production function q = KL + L where q is output and K and L are quantities of two inputs. (a) Derive the firmâ??s expansion path. (b) Explain what the expansion path tells us. For example, what happens to make the firm move along its expansion path? (c) Indicate how you would proceed to deri