The following discussion based on Gabriel Kahn, "Made to Measure: Invisible Supplier Has Penney's Shirts All Buttoned Up, " Wall Street Journal, September 11, 2003, describes a new inventory system used by J.C. Penney: "In an industry where the goal is rapid turnaround of merchandise, J.C. Penney stores now hold almost no ext
A firm uses two plants (A and B) to produce a product. The plant's marginal cost functions are given by the following equations: MCa=10+.01Qa and MCb=4+.03Qb If the firm wanted to produce 1400 units should it produce 700 units in each plant? Why or why not? Explain and illustrate graphically.
A firm uses a single plant with Costs C=160+16Q+0.1Q^2 and faces the price equation P=96-0.4Q (a). Find the firm`s profit-maximizing price and quantity. What is its profit? (b). The firm`s production manager claims that the firm`s average cost of production is minimized at an output of 40 units. Furthermore, she claims tha
Consider the production function Q=100L^.5K^.4. Suppose L=1 and K=1 so that Q=100 a. If L is increased by 1 percent, that is to L=1.01 with capital unchanged, what is the resulting percentage increase in output? b. Describe the nature of returns to scale for this production function.
What is 'market window' and why is it so important for products to reach the market early in the window?
At a management luncheon, two managers were overheard arguing about the following statement: "A manager should never hire another worker if the new person causes diminishing returns." Is this statement correct? If so, why? If not, explain why not. The Largo Publishing House uses 400 printers and 200 printing presses to produc
Please help with the following solution regarding production and maximum provide. Provide step by step calculations in the completed solution. A firm produces two goods 1 and 2 and has the following cost function C = 10Q1 + Q1Q2 + 10Q2 Where Q1 and Q2 denote quantities of good 1 and 2. P1 and P2 denote the corresponding
If fibers had a higher marginal profit per unit input than gasoline, gallons of crude should be switched from gasoline production to fiber production. Here is concrete example. Suppose the functions are: Gasoline: G = 72MG - 1.5MG^2 Fiber: F = 80MG - 2MG^2 Here gasoline output is measured in thousands of gallons, fiber ou
Calculating NPV With the growing popularity of casual surf printing, two recent MBA graduates decided to broaden this casual surf concept to encompass a "surf lifestyle for the home." With limited capital, they decided to focus on surrf print table and floor lamps to accent people's homes. They projected unit sales of these
Need help with assessing price, production, and composition inputs in reference to McDonald's.
The Law of Diminishing Returns can seem counter-intuitive. What example of diminishing returns could be used to explain this concept to a friend?
How does the 3 Scarcity and the Fundamental Economic Questions apply to the franchise dunkin donuts? What should be produced? Using the economyâ??s scarce resources to produce one thing requires giving up another. Producing better education, for example, may require cutting back on other services, such as health care. A dec
Always Round Tire has a production function of Q = 300 L.75 K.5. In the short run, if L = 250 and K = 25, what happens to the output of tires if L jumps to 300 and then 350. What law does this illustrate?
The Largo Publishing House uses 400 printers and 200 printing presses to product books. A printer's wage rate is $20, and the price of a printing press is $5,000. The last printer added 20 books to total output, while the last press added 1,000 books to total output. Is the publishing house making optimal input choice? Why or wh
1) Discuss on relationships between production and cost, highlighting the equivalence between diminishing marginal productivity and increasing marginal costs. Given a table of data representing a short-run production function (levels of the variable input and the associated total product), compute marginal and average products a
You are the manager of a small US firm that sells nails in a competitive US market (the nails you sell are a standardized commodity; stores view your nails as identical to those available from hundreds of other firms). You are concerned about two events you recently learned about through trade publications: 1) the overall marke
Please help with the following problem. The total costs for Morris Industries are summarized in the following table. Based on this information, fill in the missing entries in the table for fixed cost, variable cost, average fixed cost, average variable cost, average total cost, and marginal cost. 1 (2) (3) (4
1. New Balance Inc. has spent $10 million developing a new line of Tennis shoes. Production engineers have determined that it will cost $6 million to retrofit the existing plants to produce the new line of tennis shoes. Marketing suggests that the present value of net profits from all future sales of tennis shoes will be $14 mil
A company's marginal cost curve is MC = 10 +20Q MC is the cost (dollars) of producing the Qth unit of its product and Q is the number of units of its product produced per day. The price of a unit of its product is $8. A student at a local business school who works for the firm during the summer argues that, on the basis
Honda uses flexible plants in the manufacturing of its cars. Discuss whether this method of production results in optimum output.
How would you define â??division of labor,â? and why is this important in our economic system? In your answers, provide examples from your personal experience. Also, how is there division of labor in the military?
Please help me understand If you were a manager of a large manufacturing company and decided to offshore labor-intensive production to another country, how would you justify the decision to your employees and the community where your plants are located? What economic arguments would you make? What social or ethical argument coul
1) Q=75K^.75 L^.25 2) Q=1.4K^.70 L^.60 3) Q=1.4A^.15 B^.40 C^.45 Describe whether constant, increasing, or decreasing returns to scale. 4) For Q=1.4K^.70 L^.60: Production elasticity of capital (K) Production elasticity of labor (L)
Tall Paul Stewart Brewery produces beer. The most popular style is Tall Paul Stewart Stout. The MBA's in marketing estimate TPS Stoutâ??s production function to be Q = 400L2B, where Q is the number of bottles of TPS Stout produced each week, L is the weekly labor hours, and B is weekly total hours running the bottling line. Eac
On the first day of the new year to get her business started, the owner/photographer of Exquisite Portraits Inc. paid $200 for business cards, $1,000 for a listing in Yellow Pages, and $250 for an annual business license. She also leased a professional portrait camera and studio lighting equipment by signing an agreement to pay
The effective capacity and efficiency for the next quarter at MMU Mfg. in Waco, Texas, for each of three departments are shown. Department Effective Capacity Recent Efficiency Deign 93,600 .95 Fabrication
Radovilsky Manufacturing Company, in Hayward, California, makes flashing lights for toys. The company operates its production facility 300 days per year. It has orders for about 12,000 flashing lights per year and has the capability of producing 100 per day. Setting up the light production costs $ 50. The cost of each light is $
A software producer has fixed costs of $30,000 per month and her Total Variable Costs (TVC) as a function of output Q are given below: Q TVC Price 3,000 $ 5,000 $5 13,000 15,000 4 23,0
Given the following function: T=aK^-b L^c F^d = 0.02K ^-0.25 L^0.2 F^0.55 if K=100 L = 500 F =20,000 i) Calculate the marginal products associated with K L F. ii) What is the MRTS between K and L iii) What is the MRTS between K and F
Why do you think in certain instances one firm can provide lower prices than two or more firms?