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Pricing & Output Decisions

Firm's decision-making related to operating at a loss.

.1. 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 da

profit maximizing output and the level of optimal profit for the firm

(i) A competitive firmâ??s total cost function is given by TC = .25Q2 + 25 (with MC = .5Q). The firm faces a market price of $15. Algebraically calculate the profit maximizing output and the level of optimal profit for the firm. (ii) Suppose that fixed costs increase by $50 but the prevailing market price rema

Law of diminishing marginal productivity?

I need some guidance for the following economics questions: A. What is the law of diminishing marginal productivity? Give an example from your workplace/household of the law of diminishing marginal productivity?. a) Why is the demand of labor a derived demand? b) What is the relationship between productivity an

Economics: The law of diminishing marginal productivity

The law of diminishing marginal productivity states that as more and more of a variable input is added to an existing fixed input, eventually the additional output one gets from that additional input is going to fall.� Give an example from your work or personal life of the law of diminishing marginal productivity and ho

Wyandotte Chemical Company

Wyandotte Chemical Company sells various chemicals to the automobile industry. Wyandotte currently sells 30,000 gallons of polyol per year at an average price of $15 per gallon. Fixed costs of manufacturing polyol are $90,000 per year and total variable costs equal $180,000. The operations research department has estimated that

What you need to know about CVP analysis?

Kathy's Bakery is a local full-service bakery in Omaha, Nebraska. Kathy sells loaves of wheat bread for $3 a loaf. Of this amount, $1.50 is profit contribution. She is considering an attempt to differentiate her shop from several other competitors by only producing a special rice bread for customers allergic to wheat. Doing so w

Net Cash Flow overview

The Taylor Mountain Uranium Company currently has annual cash revenues of $1,200,000 and annual cash expenses of $700,000. Depreciation amounts to $200,000 per year. These figures are expected to remain constant for the foreseeable future (at least 15 years). The firm's marginal tax rate is 40%. A new high-speed processing unit

Marginal Analysis: Perfectly Competitive Firm

Important Problem related to TCO C, How about if we try an EXAMPLE of MR=MC for a perfectly competitive firm? (TCO C ) Answer the next question on the basis of the following information for a purely competitive firm: Output------------Price------------Total Cost ----0--------------$100---------------$100 ----1------

Analyzing the given cost functions

Suppose that the manager of a firm operating in competitive market has estimated the firm's average variable cost function to be AVC=4000-5Q+0.002Q^2 Total fixed cost is $62500. The firm across the street is charging $1000 per unit that they sell. a. What is the minimum value for AVC? b. How much output should the firm

Theory of diminishing returns

Indicate whether each of the following statements is true or false and give the reason. (a) A firm should stop expanding output after reaching diminishing returns and (b) if large and small firms operate in the same industry, we must have constant returns to scale.

Demand function and total cost function

A firm has a demand function and a total cost function as follows: P=$5,000-$3Q :TC = $3000,000 + $1,000Q + $2Q^2 Calculate the optimal output and price. Assuming: The firm is maximizing total profit. The firm is maximizing total revenue.

Optimal output

Assume a monopolist with the following: Qd =100-10p TC = 1 + 2Q Find the following: a) Price at profit maximizing output b) Profit maximizing output c) Total Revenue at profit maximizing output d) Total Cost at profit maximizing output e)Profit

Complete the following Table

Given the following table and I need to calculate the above.... have the answers and want to make sure I did this right Total output Cost TFC TVC AFV AVC ATC MC 0 $20 10 $40 20 $60 30 $90 40

MR Equation for Firms and Profit Maximizing

5. Oligopoly i. Nash 1. What is the MR equation for each firm? 2. What is the profit maximizing output level? 3. What is the market price? 4. What is the profit for each firm? ii. Collusion 1. If both firms collude, how much does EACH firm produce? (Suppose they split the total market output) 2. What is the profit

Economics, Marginal, Labor, Profit

See the attached file. 1.) Gordon's Pizzeria, a firm that is small relative to both the labor market and the pizza market, can hire workers at an hourly wage of $12. The 50th hour of labor added 4 pizzas to the firm's output, and each pizza can be sold for $10. a) How much does the 50th labor-hour add to the firm's profit?

Micro multiple choice

Question 1 Refer to the graph depicting a perfectly competitive market firm in a constant cost industry. IF market demand increase from DO to D1, in the long run: Question 2 Often, gas stations only a few miles apart differ in price by as much as 10 cents per gallon. The most likely explanation for this kind of price d

Calculating average, marginal and variable costs

Use the total cost (TC) schedule presented in the table below to calculate the average total cost, average variable cost, average fixed cost, and marginal cost when output (Q) is equal to 5. Q 0 1 2 3 4 5 6 7 8 9 TC 5 7 8 10 14 20 28 38

total, average, and marginal costs

Problems 1- Given the following total-revenue function: TR=9Q-Q² (a) Derive the total-, average-, and marginal-revenue schedules from Q = 0 to Q = 6 by 1' s. (b) On the same set of axes, plot the total-,average-,and marginal-revenue schedules of part (a) 2- Given the follow total-cost schedule: Q 0 1 2 3 4 TC

Prisoners' dilemma

Which of the following is an example of the prisoners' dilemma? 1. Firms in an industry increase their advertising expenditures, causing profits to rise. 2. A country provides subsidies to high technology firms which are consequently able to increase market share. 3. Members of a commodity cartel produce excess output,

Solving for Profit Maximization

Question: A monopolist faces a marginal revenue function of MR = 20 - Q. The monopolist's marginal cost is $15 at all levels of output. How many units of output should the firm produce in order to maximize profits?


1. Review of financial statements) Prepare a balance sheet and income statement as of December 31, 2003, for the Sharpe Mfg. Co. from the following information. Accounts receivable $120,000 Machinery and equipment 700,000 Accumulated depreciation 236,000 Notes payable 100,000 Net sales 800,000 Inventory 110,000 Accounts

profit-maximizing price

Your marketing VP says that he believes that you could make more money by first releasing a 'limited edition' version aimed at hard-core video game players and then a few months later releasing a regular edition aimed at the general public. He estimates the following inverse demand curves for each segment Hard-core game


Calculate the break-even point (Q), for a firm whose: (a) total fixed cost (TFC) = $100,000, product price per unit of output (P) = $10.00, and average variable cost (AVC) = $7.50. (b) TFC = $600,000, P = $15,000, and AVC = $12,000.

Short-run average cost curve

Given the following table: Complete the following table (round each answer to the nearest whole number): Total Variable Fixed Marginal Average Avg. Var. Avg. Fixed Output Cost Cost Cost Cost Cost Cost Cost 0 1 5 2 30 3 13 4 105 10 5 110 6 50 Complete the table then

How to Calculate Firm's Profit

Need help: I'm having problems know how to compute the firm's cost. Please help. Length: 2-4 pages A 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. Althou

Break Even and Shutdown Price

Output Fixed Cost AFC VC AVC TC ATC MC 1 $50 $30 2 $50 $50 3 $50 $80 4 $50 $120 5 $50 $170 Fill in the blanks What is the minimum price needed by a firm to break even? What is the shutdown price? At a price of $40, what output level would the firm produce? Wha

Solve: Maximum Level of Output

The table below presents estimates of the maximum levels of output possible with various combination of two inputs. Capital (K) 5 11 25 37 47 51 4 10 23 33 41 44 3 8 18 25 30 34


Q-1 You have been hired to manage a small manufacturing facility which has cost and production data given in the table below. Total Total Workers Labor Cost Output Revenue 1 $300 50 $350 2 600


Suppose that a firm maximize its total profits and has a marginal cost (MC) of production of $8 and the price elasticity of demand for the product it sells is (-)3. Find the price at which the firm sells the product.