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Pricing & Output Decisions

Calculating optimal output

Supposing the demand for a gas station is given as PD = 2.06 - .00025QD. The marginal cost is $1.31 per gallon. At his current $1.69 price, he sells 1,500 gallons per week. Is this price-output combination optimal?

Selecting Numbers of Workers

Ms. Smith, the owner and manager of the Clear Duplicating Service located near a major university, is contemplating keeping her shop open after 4:00pm. And until midnight. In order to do so, she would have to hire additional workers. She estimates that the additional workers would generate the following total output (where each

Average, fixed, total variables and costs

1. Explain any two causes of economies of scale or diseconomies of scale. How is the U shape of the long run ATC different from the U shape of the short run ATC? 2. You are given the following information for units 0-6 that are produced by The Kimoneto Corp. of Miami, Florida. The average fixed cost of unit 4 is $38.50; Th

Price and Output Determination

Why is advertising prevalent in many oligopolies, especially when industry demand is inelastic? Illustrate your answer by assuming that with advertising, a firm's demand curve has price elasticity of -1.5 and without advertising, it is -2. If MC is $10, what is the difference in the profit-maximizing price?

How a Recession Affects Certain Economic Variables

Hi, I need help understanding how everything connects together for the following question. Question: For each policy or event listed below, please indicate if it will increase (+), decrease (-), or it is uncertain (+/-) how it will affect the economic variable on the right-hand side. Fearing a recession, Americans begin to

If Marginal Cost Exceeds Marginal Revenue

If marginal cost exceeds marginal revenue, then: a. the firm ends up with a net loss b. the firm's average osts exceed average benefits c. the firm should decrease its production level d. none of the statements associated with this question are correct

The Effects of Worker Productivity

In your opinion, do you think companies produce less then there potential with current resources, because some workers are not as productive as they efficiently could be?

Economic efficiency in health care

The Quik Service Walk In Clinic always has three M.D.'s and eight R.N.s working at its 24 hour clinic, which serves customers with minor emergencies and ailments. The clinic has hired an efficiency expert to examine its operations and make suggestions for reducing costs. For some of the medical procedures done at the clinic,

Optimal Price and Output

QopyQat specializes in printing business cards and resumes, using the latest laser technology. After analysis of the business, the manager has decided that weekly demand can be approximated by Q = 25,000 - 100P The firm's cost function is C = 25,000 + 13Q + 0.002Q^2 (Q square) where Q is output per week. a) Dete

Calculating Profit Maximizing Output for a Sugar Farmer.

Suppose the market price of sugar is 22 cents per pound. If a sugar farmer produces 100,000 pounds, the marginal cost of sugar is 30 cents per pound. Is the farmer maximizing profit? If not, should the farmer produce more or less sugar?

Cost calculations using Excel

Complete the following table using your understanding of the relationship among the various costs. Output TC FC VC ATC AFC AVC MC 0 X 125 0 X X X X 10 X X X X X 5.0 X 20 X X X X X X 3.5 30 235 X X X X X X 40 X X 130 X X X X 50 X X X 5.5 X X X 60 X X X X X 3.0 X 70 350 X X X X X X 80 X X X X X X 7.0

Packages of bran muffins: Optimal package size and price

You are the manager of a bakery that produces and packages gourmet bran muffins, and you currently sell bran muffins in packages of three. You want to examine price and output strategy. A typical consumer's inverse demand for your bran muffins is now P = 3 - 0.5Q and your cost of producing bran muffins is C(Q) = Q. Determine th

Calculate: Optimal Output, Price and Profit Levels

Two local ready-mix cement manufacturers, Here and There, have combined demand given by Q = 105 - P. Their total costs are given by TCHere = 5QHere + 0.5Q2Here and TCThere = 5QThere + 0.5Q2Here. If they successfully collude: Their total output will be? Their maximum joint profits will be ? If they cannot successfully

Calculating optimal output and price levels..

Suppose the Kalamazoo Competition-free Concrete's demand function is D(P) = 5,000 -50P, its marginal cost is $40 per cubic yard, and its faces an avoidable fixed cost of $40,000 per year. What is its profit-maximizing sales quantity and price?

Calculate the various cost components

Economists at General Industries have been examining operating costs at one of its parts manufacturing plants in an effort to determine whether the plant is being operated efficiently. From weekly cost records, the economists developed the following cost-output information concerning the operation of the plant: a. AVC (averag

Cost Minimizing Combination.

Output is produced according to Q = 4L + 6K, where L is the quantity of labor input and K is the quantity of capital input. If the price of K is $12 and the price of L is $6, then the cost minimizing combination of K and L capable of producing 60 units of output is:

Cost analysis is performed.

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 produce 200 more units per day (ie. marginal product is constant and equal to 200). Installation of the first textile ma

Applied Problem

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 unit per day (i.e., marginal product is constant and equal to 200). Installation of the first textile machine o

Profit maximization calculations with and without price discrimination

Use the following information to answer the questions below: Q1 = 500 - 10P Q2 = 700 - 40P Q = 1,200 - 50P where Q1 is the quantity demanded for group 1, Q2 is the quantity demanded for group 2, and Q is the sum of the two demands for the two types of consumers. The marginal cost of serving either group is $10. a. Com

Calculating the profit maximizing price and quantity

Assume a monopolist with the following demand and cost relationships. Q = 400 - 20P TC = 10 + 5Q + Q^2 (Where "^" means "to the power of") Calculate the following: Profit maximizing price Profit maximizing quantity TR, TC, and Profit at profit maximizing Q and P.

Managerial Economics

Cleaners R Us. offers professional motel room cleaning to motel owners in Danville, Illinois. The company estimates that each additional room it cleans costs the firm $10. The owner's daughter did a study and estimated the firm's demand could be described by the following equation, where P stands for price, and Q for Quantity de

Marginal and Average Cost Functions

Given that the total cost function is: TC = 100Q-Q^2+1/3 Q^3 where Q = rate of output and TC = total cost a. Determine the marginal and average cost functions. b. Calculate the output level that minimizes average cost. c. Calculate the output level that minimizes marginal cost.

Calculate the company's profits and show your calculations.

1.Your supervisor recently instituted a plan that encourages her managers to share non-private demographic characteristics voluntarily provided by those who purchase your firm's final product. Since the plan was implemented, the same amount of voluntary information is being collected by each manager, however, the supervisor is s

Determine the optimal price and minimum AVC.

1. After a 10% price discount, a firm found that its weekly sales increased by 30%. If the marginal cost (MC) of this product is $40 each, what is the optimal price for this product? 2. Suppose the total cost equation for a competitive firm is given by: TC=1,000+ 10Q -2Q^2 + 0.5Q^3 (A) At what output is the average vari

Optimal output level: Example problem

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