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# Output & Costs

### Effect of 5 Conditions on a Firm's ATC and AVC Curves

Indicate the effect that each of the following conditions will have on a firm's average variable cost curve and its average total cost curve. a. The movement of a brokerage firm's administrative offices from New York City to New Jersey, where the average rental cost is lower. b. The use of two shifts instead of three shift

### Short-run and long-run profits in three market structures.

Introduction: Based on the pricing and output decisions in the short run, firms in Perfect competition, Monopoly, and Monopolistic competition show an ability to earn abnormal profits. However, it is observed that in the long run, these firms are able to earn only normal profits. Task: Do you agree with the statement above? A

### Firm's Optimal Quantity, Price and Profit

1. The original revenue function for the microchip producer is R=170Q-20Q2. Derive the expression for marginal revenue, and use it to find the output level at which revenue is maximized. Confirm that this is greater than the firm's profit-maximizing output, and explain why. 2. Suppose a firm's inverse demand curve is given b

### Examine the effect of substituting labor with machine.

The MorTex Company assembles garments entirely by hand even though a textile ma- chine exists that can assemble garments faster than a human can. Workers cost \$50 per day, and each additional laborer can produce 200 more units per day (i.e., marginal product is constant and equal to 200). Installation of the first textile machin

### Output and price in monopolistically competitive markets

Based on marginal revenue/marginal cost analysis, describe how output and price are determined in monopolistically competitive markets. Discuss what firms try to maximize, what rule they need to follow to do this, and how this determines the amount they will produce and the price they will charge?

### Microeconomics help is given.

Karen runs a print shop that makes posters for large companies. It is a very competitive business. The market price is currently \$1 per poster. She has fixed costs of \$250. Her variable costs are \$1000 for the first thousand posters, \$800 for the second thousand, and then \$750 for each additional thousand posters (Total, 50 poin

### Maximum Profit and the Values of L and K

A firm's production function is given by ....(see attachment) , where Q, L and K denote the number of units of output, labour and capital. Labour costs are \$2 per unit, capital costs are \$1 per unit and output sells at \$8 per unit. The profit function is ....... Find the maximum profit and the values of L and K at which

### Should a monopoly be taxed or subsidized?

If government wanted to encourage a monopoly to produce the socially efficient quantity, should it use a per-unit tax or per-unit subsidy? Explain how this tax or subsidy would achieve the socially efficient level of output. Among the various interested parties - the monopoly firm, the monopoly's consumers, and other taxpayers -

### Input analysis is demonstrated. Answers Largo Publishing House uses 400 printers and 200 printing presses to produce books. A printer's wage rate is \$20 and the price of a printing press is \$5,000. The last printer added 20 books to total output, while the last press added 1000 books to total output. Is the publishing house making the optimal input choice? Why... If not, how should the manager of Largo Publishing House adjust input usage?

Largo Publishing House uses 400 printers and 200 printing presses to produce books. A printer's wage rate is \$20 and the price of a printing press is \$5,000. The last printer added 20 books to total output, while the last press added 1000 books to total output. Is the publishing house making the optimal input choice? Why...

### Discuss economic order quantity.

Analyze the following scenario: Meals for the Homeless buys 30,000 large cans of green beans each year. The cost of each can of beans is \$4. The cost to place an order for beans, including the time of the employee placing the order, shipping, and so forth, comes to \$20 per order. The out-of-pocket carrying costs (for storage, et

### Four types of market failure are explained with case studies.

Each instance that follows is an example of one of the four types of market failure (imperfect market structure; the existence of public goods; the presence of external costs and benefits; and imperfect information). In each case, identify the type of market failure and defend your choice briefly. a. An auto repair shop convi

### Net Present Value (NPV) is also evaluated in this case.

Analyze the following scenario: Duncombe Village Golf Course is considering the purchase of new equipment that will cost \$1,200,000 if purchased today and will generate the following cash disbursements and receipts. Should Duncombe pursue the investment if the cost of capital is 8 percent? Why? Clearly label calculations in anal

### Economies of scale in the chicken farming industry

The Smythe chicken farm outside Little Rock, Arkansas, produces 25,000 chickens per month. Total cost of production at Smythe Farm is \$28,000. Down the road are other farms. Faubus Farm produces 55,000 chickens a month, and total cost is \$50,050. Mega Farm produces 100,000 chickens per month, at a total cost of \$91,000. Thes

### Long-Run Costs and Output Decisions

For cases A through F in the following table, would you (1) operate or shut down in the short run and (2) expand your plant or exit the industry in the long run? A B C D E F Total revenue 1,500 2,000 2,000 5,000 5,000 5,000 Total cost

### Economies of scale - Long-Run Costs and Output Decisions

Which of the following industries do you think are likely to exhibit large economies of scale? Explain why in each case. a. Home Building b. Electric power generation c. Vegetable farming d. Software development e. Aircraft manufacturing

### Short-run & long-run output decisions for a loss-making firm

You are given the following cost data: Total fixed costs are 100. q TVC 0 0 1 5 2 10 3 20 4 40 5 65 6 95 If the price of output is \$15, how many units of output will this firm produce? What is total revenue? What is total cost? Briefly explain using the concept of marginal cost. What d

### What two policies can a policy maker use to reduce harmul emissions? What are the economic consequences of each?

Sometimes market activities (production, buying, and selling) have unintended positive or negative effects outside the market's scope. These are called externalities. As a policy maker concerned with correcting the effects of gases and particulates emitted by and local power plant, answer the following questions: 1.What two po

### Cost analysis and profit maximization under various production strategies

A firm uses a single plant with cost C=160+16Q+0.1Q^2 and faces the price equation P=96-0.4Q. A) Find the firm's profit-maximizing price and quantity. What is its profit? B) The firm's production manager claims that the firm's average cost of production is minimized at an output of 40 units. Furthermore, she claims that

### Make cost, revenue, profit and productivity calculations. Decide whether a firm should lay off workers or 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. Assume that total fixed cost equals \$1,000,000. Calculate the values for the following four formulas: Total Va

### Price Index and Inflation

I need help calculating nominal GPA for year 4 and Real GDP for year 5. Units of Price Year Output Per Unit 1 3 3 2 4 4 3 6 5 4 7 7 5 8

### Analyze explicit and implicit costs.

1. What is the difference between explicit and implicit costs? Which of the costs is most closely associated with opportunity costs and why? 2. State and explain the law of diminishing returns. How does this law apply to a typical day at work or at school? (Or, if you could imagine, taking an on line microeconomics course).

### Finding Opportunity Cost

Bella can produce either a combination of 60 silk roses and 80 silk leave or a combination of 70 silk roses and 55 silk leaves. If she now produces 60 silk roses and 80 leaves, what is the opportunity cost of producing an additional 10 silk roses?

### Calculation of marginal cost

1.If a company has a cost curve of TC = 300 + 2Q + Q2 and it produces 300 units per day, then its marginal cost is 2. As output expands from 199 to 200 units and total costs rise from \$2985 to \$3000, the marginal cost of production is:

### Cost Calculations for UCarts Stamping Machine

The maker of UCarts is purchasing a new stamping machine. Two options are being considered, Rooney and Blair. The sales forecast for UCarts is 8,000 units for next year. If purchased, the Rooney will increase plant fixed costs by \$20,000 and reduce variable costs by \$5.60 per unit. The Blair would increase fixed costs by \$5,000

### Game Plan for Court Questions

You are the manager of a paper mill and have been subpoenaed to appear before a joint session of the Senate Consumer Affairs and the Senate Environmental subcommittees. The Consumer Affairs Subcommittee is interested in your testimony about the pricing practices of your company because a recent news magazine reported that your

### Determining a firm's profit from its cost graph

The upper graph is for a perfectly competitive firm. The lower graph is for a monoploist. Use the graphs to answer the following questions: 1. What is the firm's Total Revenue? 2. What is the Total Cost? 3. What is the firm's Total Profits? 4. If a monopolist were to behave like a perfectly competitive firm (operating in t

### The relationship between marginal and average costs

Consider the following scenario to understand relationship between marginal and average values. Suppose Tim is a professional basketball player, and his game log for free throws can be summarized in the table below. Fill in the columns to show Tim's free-throw percentage for each game and overall free-throw average. Game

### Present Value Problem

ABC Comnpany is considering a proposal to open new stores throughout the U.S. In 2012. They plan to initially open 100 of these in 2012, and then each year thereafter open 25% more than the previous year. (It is acceptable that in some years, fractions of centers would be opened.) Each store will cost \$150,000 and will resul

### Decreasing Productivity and Increasing Costs

What is the relationship between diminishing marginal productivity and increasing marginal costs? Give examples.

### Profit-Maximization: Third Degree Price Discrimination

Hi, You are the manger of a monopoly that sells a product to two groups of consumers in different parts of the country. Group 1's elasticity of demand is -2, while group 2's elasticity of demand is -6. Your marginal cost of producing the product is \$10. a) Determine your optimal markups and prices under third degree price