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Output & Costs

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

Costs and price in a perfectly competitive firm

A perfectly competitive firm faces the following monthly costs and price. TC = 5,625 + 5Q + 0.01Q2 ATC = 5 + + 0.01Q MC = 5 + 0.02Q P = 20. a. What is the fixed cost of this firm? b. What is the optimal output of this firm? c. What is the economic profit or loss of this firm? d. If there a

Economies of Scale or not?

A security system companyâ??s total production costs depend on the number of systems produced according to the following equation: Total Costs = $10,000,000 + $2000*quantity produced. Given these data, which of the following is a false statement? a. There are economies of scale. b. There are fixed costs associated with t

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

Newton Co. had installment sales of $1,000,000 and cost

Installment sales. Newton Co. had installment sales of $1,000,000 and cost of installment sales of $700,000 in 2010. A 2010 sale resulted in a default in 2012, at which time the balance of the installment receivable was $30,000. The repossessed merchandise had a fair value of $15,000. Instructions (a) Calculate the rate of

How many workers should be hired?

Ms Smith, the owner and manager of the Clear Duplicating Service located near a major university, is contemplating keeping her shop open after 4 P.M. and until midnight. In order to so, she would have to hire additional workers. She estimates that the additional workers would generate the following total output (where each unit

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

The cost of equity

A firm finance completely with equity currently has a cost of capital equal to 15 percent. If Modigliani and Miller's Proposition 1 holds and the firm is thinking about its capital structure to 50 percent debt and 50 percent equity, then what will be the cost of equity after the change if the cost of debt is 10 percent?

Calculating optimal number of workers in the given case

A cost minimizing firm has an output function of the form y=2K^(.5) L^.(5) K and L are quantity of physical capital and labor employed respectively. Rental rate of capital R = $100 Wage of Labor W= $50 If this cost minimizing firm employs 50 units of capital (k=50), how many workers does this firm employ?

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

Economics: Benefit-Cost Ratio

The NJ Garden State Parkway is planning to add more lanes in their northern corridor. They need to decide between two alternatives MM and PP. MM requires an initial investment of $18 million and $300,000 in annual costs. PP requires an initial investment of $18 million and $ 400,000 in annual cost. The annual benefits from the p

Total cost, average cost, and profit calculations

Handy Vac manufactures and distributes a line of feather dusters. Demand per period (Q) for the Vac-O-Matic, their most popular feather duster, has the relationship: Q = 500 - (1/2)P Where P is price. Total costs (with a "normal" distribution to the unit holders included) of producing Q units per period are: TC = 10

Economics: Total cost and average cost calculations.

The cost function for a business is shown in the table below (where Q is the level of output): Q (units) Cost 0 8 1 24 2 38 3 44 4 51 5 52 6 59 7 65 8 79 9 95 10 125 Calculate the (a) marginal cost and (b) the average total cost schedules.

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

Should the firm continue to operate at a loss?

You've been hired as a managing consultant by an unprofitable firm to determine whether it should shut down its operation. The firm currently uses 70 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 $500 per day. A

Managerial Economics

You have been appointed as Global Manager of a firm that has two plants, one in the United States and one in Mexico. Assume, you cannot change the size of the plants or the amount of capital equipment. The wage in Mexico is $5. The wage in the U.S. is $20. Given current employment, the marginal product of the last worker in Mexi

Imperfect Competition

Output------------Price------------Total Cost ----0--------------$500---------------$250 ----1--------------$300---------------$260 ----2--------------$250---------------$290 ----3--------------$200---------------$350 ----4--------------$150---------------$480 ----5--------------$100---------------$700 How many units

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

Deriving short run supply function

The Magazine Delivery Company is a typical firm in the perfectly competitive magazine delivery business. The company delivers magazines and stocks magazine racks at convenience stores located throughout the state of Kentucky. Marginal costs of service are described by the relation: MC = $5 + $0.4Q where Q is racks of ma

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