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# Output & Costs

### 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

### The consumer surplus and optimal strategy are determined in these questions.

The average consumer at a firm with market power has an inverse demand function of P = 10 - Q. The firm's cost function is C = 2Q. If the firm engages in optimal two-part pricing, it will earn profits of \$2. \$32. \$64. none of the statements associated with this question are correct. Suppose three consumers of

### Question about economies of scope

Why are hospitals used as an example of economies of scope?

### Managerial Economics: Calculating Maximum Profit and Revenue

A monopolist's demand function is given by P = 80-3Q (with MR = 80-6Q). Its total cost function is TC = 20Q + 200 (with MC = 20). (i) Using algebra determine the profit maximizing output, price and optimal profit for the firm. (ii) Suppose that instead of maximizing profit, the firm wants to maximize total revenue

### The MorTex Company: Production and Cost Analysis

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

### Opportunity cost: telemarketing

You are the manager of USA 800, a small telemarketing company. Your company owns its own building and rents part of it as temporary storage for \$10,000 per month. USA 800 has been asked to do a new telemarketing campaign for Ford motor company, but accepting this campaign will require it to use all the rented space. What is the

### Cost Data: TC, AVC, AFC, MC

Given the output and total Cost Data in the table below, complete the following columns: variable cost, fixed costs, marginal costs,average total columns, then on a graph, plot the marginal and average costs data (plot them on the same graph, not on two different graphs). Then from graph identify the level of output at which

### Big Squeeze

The Bureau of Labor Statistics showed an astonishing 5 percent gain in productivity in 2001â??s fourth quarter. Some argued that technology had again made the economy more productive than ever before. White-collar workers are more likely to argue that the gains have been made on their backs. The recessionâ??s layoff survivors

### Revenue optimization problem - Fashion retailer session

A revenue optimization problem that is similar to the one studied in the fashion retailer session. A product manager is responsible for selling 2000 units of a fashion retail item over a period of 15 weeks.

### Labor and raw material

A firm uses two variable inputs, labor (L) and raw materials (M), in producing its output. At its current level of output: CL = \$10/unit MPL = 25 CM = \$2/unit MPL = 4 a) determine whether the firm is operating efficiently, given that its objective is to minimize the cost of producing the given level of output. b)

### Distinguish between explicit & implicit costs

1- what is the law of diminishing returns? Give discriptive example? 3- distinguish between explicit & implicit costs, giving example of each. What are the explicit & implicit costs of attending college?? Why does the economist classify normal profit as a cost??

### Maximizing Output

You have been appointed â??Global Managerâ? 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 i

### Accounting: Cost of sales.

On Dec 31 2007 Carr company inventory burned sales and purchases for the year has been 1,400,000 and 980,000 respectively.the beg inventory (Jan 1,2007) was \$170,000 in the Past carr's gross profit has average 40% of selling price compute the estimated cost of inventory burned as of Dec 31,2007

### Questions on market structure

Please provide assistance. 1. Pick any organization; determine what strategy you would recommend for the organization in terms of pricing, non price barriers to entry and product differentiation? 2. Explain which market structures are price makers and price takers. What is the difference in the demand curves and why. 3.

### Short-run Market Supply

Carolina Textiles, Inc., is a small manufacturer of cotton linen that it sells in a perfectly competitive market. Given \$100,000 in fixed costs per day, the daily total cost function for this product is described by: TC = \$100,000 + \$2Q + \$0.0625Q2 MC = dTC/dQ = \$2 + \$0.125Q where Q is units of cotton linen produced

### Degree of Operating Leverage

Degree of Operating Leverage. Untouchable Package Service (UPS) offers overnight package delivery to Canadian business customers. UPS has recently decided to expand its facilities to better satisfy current and projected demand. Current colume totals two million packages per week at a price of \$12 each, and average variable co

### Production Cost, Marginal Analysis and Profit Maximization

Please use the attached scenario to help answer the four questions below: Identify whether the change in the price of the database is a fixed or variable cost Describe how total, average, variable, and marginal costs will change after the change in the database price Identify whether the rent increase is a fixed or vari

### Market Resources

I need help with the following problem. Units of Resource Resources Total Output Price ResourcePrice 1 10 \$5 \$10 2 25 \$5 \$10 3 35 \$5 \$10 4 40 \$5

### Calculate the missing total-revenue and marginal-revenue amounts

3. How does the demand curve faced by a purely monopolistic seller differ from that confronting a purely competitive firm? Why does it differ? Of what significance is the difference? Why is the pure monopolistâ??s demand curve typically not perfectly elastic? 5. Suppose a pure monopolist is faced with the demand schedul

### Discounted Cash Flow Techniques

You are advising a friend who has a decision to make regarding Social Security. He is about turn 62 years old, and is eligible for early Social Security benefits. His early benefits would amount to \$677 each month. However, he knows that if he waits until he is 65, his monthly benefits would be \$875 a month. According to the

### Industry Supply

Stanford Plastics, Inc. and Cal-Tech Associates, Inc. supply a generic phone jack that connects telephone cords to phone outlets. Proprietary cost and output information for each company reveal the following relations between marginal cost and output: MCS=dTCS/dQ=\$1+\$0.00002QS (Stanford) MCC=dTCC/dQ=\$1.50+\$0.000005QC

### Average cost minimization

Average Cost Minimization. Better Buys, Inc., is a leading discount retailer of wide-screen digital and cable-ready plasma HDTVs. Revenue and cost relations for a popular 55-inch model are: TR = \$4,500Q ï?­ \$0.1Q2 MR = ï?TR/ï?Q = \$4,500 ï?­ \$0.2Q TC = \$2,000,000 + \$1,500Q + \$0.5Q2 MC = ï?TC

### Concept of using MPl and MPk

A firm is producing 1,000 units of output with 40 units of labor and 30 units of capital. The marginal product of the last units of labor and capital are, respectively, MPL = 69 and MPK = 135. The prices of labor and capital are, respectively, w = 30 and r = 85. What should the firm do in order to minimize the cost of producing

### Determing Production Output Costs

You are the general manager of a firm that manufactures personal computers. Due to a soft economy, demand for PCs has dropped 50 percent from the previous year. The sales manager of your company has identified only one potential client, who has received several quotes for 10,000 new PCs. According to the sales manager, the cl

### Breakeven Output problem

Southcoast Oil's fixed costs are \$2,500,000 and its debt repayment requirements are \$1,000,000. Selling price per barrel of oil is \$18 and variable costs per barrel are \$10. (a) Determine the breakeven output (in dollars). (b) Determine the number of barrels of oil that offshore must produce and sell in order to earn a

### Problems in market structures

Discuss problems with market structures, oligopoly, monopoly etc.

### Expected Return on Lotteries

Assume you buy a lottery ticket, which has the odds of one winner for every 1,000 tickets sold; The ticket costs \$10 and if you win, you receive \$2,500. What is the expected return from buying this lottery ticket? What does the expected return % number mean?

### Marginal cost and average total cost schedules

I. need to show how this was solved Suppose that the firm's cost function is given in the following schedule (where Q is the level of output): Output Total Q (units) Cost 0 7 1 25 2

### Strategic Financial Mgmt Problem

Webmasters.com has developed a powerful new server that would be used for corporationsâ?? Internet activities. It would cost \$10 million at Year 0 to buy the equipment necessary to manufacture the server. The project would require net working capital at the beginning of each year in an amount equal to 10% of the year's projec