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Output & Costs

Challenge Case

As APEX anticipates significant increases in demand for PVC pipe, it is considering two alternatives: Plan A: Produce all PVC in Illinois, and provide nationwide distribution from that one site. Plan B: Produce PVC pipe both at one plant in Illinois and one plant in Colorado. Distribute east of the Mississippi from Illinois

Incremental profit

Universal Audio manufactures car speakers that it sells to other resellers that then customize and distribute the product to retailers that sell hi-fi auto equipment. The yearly volume of output is 300,000 pairs. The selling price and cost per unit are shown below: Selling price $150 Costs: Direct material $25 Direct labor

Market demand (perfectly competitive market)

Consider a market in which the demand curve is given by: P = 500 - 12Q Average and marginal cost are both a constant of 20. a.What is the perfectly competitive price? b.What is the elasticity of market demand at the competitive price? c.If the market is perfectly competitive, what is the elasticity of demand facing an

Microeconomics Production Question

Suppose there are two goods, video cassettes and record albums, produced by firm A and firm B. Suppose the marginal rate of product transformation (RPT) of record albums for video cassettes in firm B is 2(That is, firm B can always trade 2 video cassettes for 1 record album in production). On the other hand, the RPT in firm A is

Merger and profitability

The market for a standard-sized cardboard container consists of two firms: BooBox and Flimflax. As manager of BooBox you enjoy patented technology that permits your company to produce boxes faster and at lower cost than Flimflax. You use this advantage to be first to choose profit-maximizing output level in the market. The i

Costs Analysis Problem

Use the following equations to demonstrate why a firm producing at the output level where MR = MC will also be able to maximize its total profit (i.e., be at the point where marginal profit is equal to zero). Note: To prove this, you must first present the algebraic expression for the profit function, and then the first-order

Activity Rates

As You Like It Gardening is a small gardening service that uses activity-based costing to estimate costs for pricing and other purposes. The proprietor of the company believes that costs are driven primarily by the size of customer lawns, the size of customer garden beds, the distance to travel to customers, and the number of cu

Monopoly and Four Firm Concentration Ratio

1). Suppose the demand curve for a monopolist is Qd = 500 - P, and the marginal revenue function is MR = 500 - 2Q. The monopolist has a constant marginal and average total cost of $50 per unit. a). Find the monopolist's profit-maximizing output and price. b). Calculate the monopolist's profit. c). What is the Lerner ind

Monopolist demand function - One and Only Inc.

One and only Inc is a monopolist. The demand function for its product is estimated to be Q=60-0.4P +6Y+2A Y=3,000 P=Price per Unit Y=Per capita disposable personal income (thousands of dollars) A=hundreds of dollars of advertising expenses The Firms average variable cost function is AVC=Q²-10Q+60 Y is equal to 3(th

Current Market Conditions

Prepare a 400-500-word paper analyzing the current market conditions for Shell Oil Company and address the following topics in your analysis: ---> Impact of new companies entering the market ---> Impact of government regulations

Production costs

Please refer attached file for better clarity of tables and graphs. Choose the one alternative that best completes the statement or answers the question. Table 8.1 Mr. B's Taxi Service Annual Income Statement Revenue $100,000 Labor Expense $50,000 Maintenance Expense $5,000 Net Income

Marginal Product of Labor

See attached file for complete details. Problem 1 Number Of Workers Output 0 0 1 50 2 110 3 300 4 450 5 590 6 665 7

Extent - (How much) Decisions

A copy company wants to expand production. It currently has 20 workers who share eight copiers. Two months ago, the firm added two copiers, and output increased by 100,000 pages per day. One months ago, they added five workers, and productivity also increased by 50,000 pages. Copiers cost about twice as much as workers.

Profit maximization and deregulation

1. Bob Edwards owns a bagel shop. Bob hires an economist who assesses the shape of the bagel shop's average total cost (ATC) curve as a function of the number of bagels produced. The results indicate a U-shaped average total cost curve. Bob's economist explains that ATC is U-shaped for two reasons. The first is the existence of

Price of Products in the Marketplace.

Dear OTA, Please help with the following questions below: (1) Suppose that the price of product A falls from $20 to $15. In response, the quantity demanded of A increases from 100 to 120 units. The quantity demanded for product B increases from 200 to 300. Calculate the arc cross elasticity between Product B and Product A.

Price & output decision - demand fuction

This question is about chapter 11 , " price & output decision" in economics for managers by Harris Motors co., believes it faces the following segmented demand function: P = 150 - 0.5Q when 0 ≤ Q ≤ 50 P = 200 - 1.5Q for Q > 50 a) Indicate both verbally and graphically why such a segmented d


Question The following payoff matrix shows the various profit outcomes for 3 projects, A, B, and C, under 2 possible states of nature: the product price is $10 or the product price is $20. Profit Project P = $10 P = $20 A 20 80 B 40 60 C

Monopolistic Competition: Analyzing the Cost Function

You are the manager of a monopolistically competitive firm. The present demand curve you face is P=100-4Q. Your cost function is C(Q)=50+8.5Q2 (That's Q squared). a. What level of output should you choose to maximize profits? b. What price should you charge? c. What will happen in your market in the long run? Explain.

Price competition

Chapter 18-2 The market for digital cameras is relatively new. Ajax Inc. produces what they regard as a high quality digital camera. Knockoff Inc. produces what they regard as low quality digital camera. However, since the market is so new, reputations for quality have not yet developed and consumers cannot tell the differenc

Micro economics questions

Question 1 Monopolistic competition differs from perfect competition because in monopolistically competitive markets a. each of the sellers offers a somewhat different product. b. there are barriers to entry. c. all firms can eventually earn economic profits. d. strategic interactions between firms

Capital and Labor

A firm produces output, y, by using capital, k, and labor, l, according to the production function. y=k^at^b The firm can purchase all the capital and labor it wants at prices r and w, respectively. a) Use the method of Lagrange multipliers to find the cost function c(r,w,y). Find the average and marginal cost. b)

Sophisticated Monopoly Pricing

Sophisticated Monopoly Pricing 1. The Locust Corporation is comprised of a marketing division, and production division. The marginal cost of producing a unit of the firm's product is $10 per unit, and the marginal cost of marketing is $4 per unit. The demand curve for the firm's product is: P = 100 - 0.01Q Where P is the pr

Break Even & Growth Rate Questions

See the attached file. I. A company has fixed cost of $200,000. The sales price of its output is $56 per unit. It has variable costs of $31 per unit. The company is going to install new equipment which will cut the fixed costs to $150,000 but which will increase variable costs to $34 per unit. The sales price will remain at $5

Profit Maximization Explained

Question 1 Consider the following short-run production function (where L = variable input, Q = output): Q = 10L – 0.5L2 Suppose that output can be sold for $10 per unit. Also assume that the firm can obtain as much of the variable input (L) as it needs at $20 per unit. a. Determine the marginal revenue product fun

Breakeven Output and Total Sales Revenue

The Goldberg-Scheinman Publishing Company is publishing a new managerial economics text for which it has estimated the following total fixed and average variable costs. Total Fixed Costs: Copy Editing 10,000 Typesetting 70,000 Selling and Promotion 20,000 Total fixed costs: 100.000 Average Variable Costs

Short-Run Firm Supply

Tinley Paper, Inc. produces uncoated paper used in a wide variety of industrial applications. Newsprint, a major product, is sold in a perfectly competitive market. The following relation exists between the firm's newsprint output and total production costs: Total Output (tons) Total Cost ($) 0