Assignment 14

Julie owns a store that sells previously-owned video games. Last year, Julie generated $250,000 in total revenues. Her explicit costs were $175,000, which included wages paid to her employees and payments made to her and suppliers. Last year Julie also received an offer of $75,000 per year to manage a retail outlet of a chain-store competitor. Based on this information: accounting profit = $0; economic profit = −$75,000.   accounting profit = $175,000; economic profit = $75,000.   accounting profit = $75,000; economic profit = $0.   accounting profit = $25,000; economic profit = $100,000.   accounting profit = $75,000; economic profit = −$100,000.

Joe is the owner-operator of Joe's Haircuts Unlimited. Last year he earned $175,000 in total revenues and paid $110,000 to his employees and suppliers. During the course of the year, he received three offers to work for other barbers, with the highest offer being $60,000 per year. Is Joe earning a normal profit? No, he is earning an above-normal profit. No, but he is earning an accounting profit and that is all that matters. Yes, but his economic profit is $0 and that is not good. We cannot be sure, because "normal" profit is a subjective judgment. No, his economic profit is negative.

am. 133.

Q2. At a recent board meeting, the president and CEO got into a heated argument about whether to shut down the firm's plant in Miami. The Miami plant currently loses $60,000 monthly. The president of the firm argued that the Miami plant should continue to operate, at least until a buyer is found for the production facility. The president's argument was based on the fact that the Miami plant's fixed costs are $68,000 per month. The CEO exploded over this point, castigating the president for considering fixed costs in making the shutdown decision. According to the CEO, "Everyone knows fixed costs don't matter!" a. Should the Miami plant be closed or continue to operate at a loss in the short run? Explain your answer with a graphical representation. b. How would you explain to the incorrect party that he or she is wrong?

The Campus Crustacean Company receives $2 per box for its crawfish and is selling 1,600 boxes to maximize its profits. What is the profit per box of crawfish at this equilibrium level of output if the average variable cost is $1 per box and total fixed costs are $1,200? Multiple Choice   $0.25   $0.50   $1.00   $1.25

9. A soot spewing blacksmith producing steel S is located near a laundry where clean clothes are hung on the line to dry. Soot from the smith increases the costs of the cleaner: CL = L2 + 4S. The cleaner is a price taker who charges a price of PL = $10 per unit of output. The blacksmith has cost function Cs = S and sells output at Ps = $40. Compute the noncooperative solution L = and S = Compute the cooperative solutions L = and S = Demonstrate that a per-unit tax of t = could induce the cooperative outcome.

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 a 15 percent increase in output would not affect fixed costs but would reduce average variable costs by 60 cents per gallon. The marketing department has estimated the arc elasticity of demand for polyol to be –2.0.a. How much would Wyandotte have to reduce the price of polyol to achieve a 15 percent increase in the quantity sold?b. Evaluate the impact of such a price cut on (i) total revenue, (ii) total costs, and (iii) total profits.

KidzPoses Inc., a profit-maximizing business, is the only photography business in town that specializes in portraits of small children. James, who owns and runs KidzPoses, expects to encounter an average of eight customers per day, each with a reservation price (shown in the following table). Assume James has no fixed costs, and his cost of producing each portrait is $12. Customer                                         Reservation Price ($ per photo)        1                                                                       50        2                                                                       46        3                                                                       42        4                                                                       38        5                                                                       34        6                                                                       30        7…

Katie's Quilts is a small retailer of quilts and other bed linen products. Katie currently purchases quilts from a large producer for $60 each and sells them in her store at a price that does not change with the number of quilts that she sells. Katie is considering vertically integrating by making her own quilts. If the fixed cost of vertically integrating is $10,000 and she can produce quilts at $50 per quilt, her total cost of producing quilts, q, herself is C= 10,000+ 50g. How many quilts does Katie need to sell for vertical integration to be a profitable decision? For vertical integration to be profitable, Katie must sell at least quilts. (Enter your response rounded to the nearest whole number.)

Please don't copy , answer should be unique.

You own AAA Audio/Video Repair. You make service calls to customers’ homes to repair their audio/video equipment such as television sets and home theater systems. Your fixed costs are $10,000 per year, and your variable costs for each service call are $20. If you charge $75 for each service call, how many service calls will you have to make in order to break even?

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 $30 per gallon. Fixed costs of manufacturing polyol are $180,000 per year and total variable costs equal $360,000. The operations research department has estimated that a 15 percent increase in output would not affect fixed costs but would reduce average variable costs by 60 cents per gallon. The marketing department has estimated the arc elasticity of demand for polyol to be –2.0. How much would Wyandotte have to reduce the price of polyol to achieve a 15 percent increase in the quanity sold in percent? Such a price cut would increase or decrease total revenues from $900,000 to $                 ? Total costs would be  $              . and total profits would be $                             ?

Please show calculations with formula.

Modified True or False: State whether each statement is true or false. If the statement is false, briefly explain why it is so, and then restate it to make it true. Spreading overhead is the process of dividing total fixed costs by more units of output, which implies that average fixed cost declines as quantity declines. Diminishing returns, or decreasing marginal product, imply diminishing marginal cost. At the output level where MR = MC, if the corresponding P is above AVC but below ATC, the loss-minimizing move is to shut down or stop production.  A firm that is breaking even, or earning a zero level of profit, is one that is earning exactly a normal rate of return, which implies that new investors are not attracted, but current ones are not running away either. Zero economic profit implies zero accounting profit. In the long run, if price is below average total cost, then it pays to just shut down. The shapes of long-run cost curves follow directly from the assumption of a fixed…

Douglas Fur is a small manufacturer of fake-fur boots in New York City. The following table shows the company’s total cost of production at various production quantities.

Economics of customer acquisition for fedex: 140 accounts in advertising industry use 2,285 courier paks (cp) per month cp price is $12.50 and variable cost is $4.25 retention rate = 0.9, discount rate = 12% what is the maximum fedex should be willing to spend to acquire a new account in this industry? what is the maximum that fedex should spend/customer per year to increase retention to 0.95? (could you show me it worked out? Thank you!) Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

George’s T-Shirt Shop produces 5,000 custom printed T-shirts per month. George’s fixed costs are $15,000 per month. The marginal cost per T-shirt is a constant $4. What is his break-even price? What would be George’s break-even price if he were to sell 50% more shirts?

Business-process outsourcing (BPO) is a type of outsourcing that consists of contracting operations and responsibilities of a specific business process (e.g., human resources) to a third-party service provider. Such outsourcing generally began with manufacturing firms outsourcing their supply chain but has grown into a much wider range of processes, including marketing, finance, sales, and accounting. According to a recent Forbes article, the revenue of the global outsourced services industry rose from $45 billion in 2000 to nearly $100 billion in 2012. Competition among firms in the BPO market is strong. Companies based in the United States include HP Enterprise Services, Affiliated Computer Services, and Automated Data Processing (ADP). A number of Indian companies, however, also provide worldwide BPO services, such as Infosys, Wipro, and Genpact. An article in BusinessWeek suggested that BPO can save end users anywhere from 15 to 85 percent. International BPO service providers are…

Heller Manufacturing has two production facilities that manufacture baseball gloves. Production costs at the two facilities differ because of varying labor rates, local property taxes, type of equipment, capacity, and so on. The Dayton plant has weekly costs that can be expressed as a function of the number of gloves produced TCD(X) - x2 - x+ 6 where X is the weekly production volume in thousands of units and TCD(X) is the cost in thousands of dollars. The Hamiton plant's weekly production costs are given by TCH(Y) - y + 2Y + 0 where Y is the weekly production volume in thousands of units and TCH(Y is the cost in thousands of dollars. Heller Manufacturing would like to produce 9,000 gloves per week at the lowest possible cost. (0) Formulate a mathematical model that can be used to determine the optimal number of gloves to produce each week at each facility. min s.t. X, Y20 (b) Use Excel Solver or LINGO to find the solution to your mathematical model to determine the optimal number of…

The table below shows cost data for WipeOutSki Company, which manufactures skis for beginners. If the company’s fixed costs are $30, what is the marginal cost X? Quantity Variable Cost Fixed Cost Total Cost Average Variable Cost Average Total Cost Marginal Cost 0 0 $30         1 $10 $30         2 $25 $30       X 3 $45 $30         4 $70 $30         5 $100 $30         6 $135 $30         Group of answer choices $15 $55 $5

Royersford Knitting Mills, Ltd., sells a line of women’s knit underwear. The firm now sells about 20,000 pairs a year at an average price of £40 each. Fixed costs amount to £240,000, and total variable costs equal £480,000. The production department has estimated that a 10 percent increase in output would not affect fixed costs but would reduce average variable cost by 40 cents. The marketing department advocates a price reduction of 5 percent to increase sales, total revenues, and profits. The arc elasticity of demand with respect to prices is estimated at −2. (mark as many as apply)   The proposal to cut prices by 5 percent would increase total revenues from £800,000 to 836,000 – correct   Total costs would be £759,200 and total profits would be £76,800– correct   The proposal to cut prices by 5 percent would decrease total revenues from £800,000   to 836,000 – incorrect   Total costs would be £759,200 and total revenues would be £76,800 – incorrect   Could anyone explain this??

PakPerfect Inc. estimates equation of its total costs of production as TC = 500 + 10Q + 5Q2 and market demand for its product as Qd = 105 – (1/2) P, where Q is quantity in units and P is price in Pak$. Write the equations of the firm’s costs, as a function of Q: Average Total Cost ATC Average Variable Cost AVC Average Fixed Cost AFC Given above costs can you determine what will be the firm’s production in Stage 1? What is the breakeven price and breakeven quantity for this firm? What is the shutdown price and quantity for this firm? Draw the firm’s costs in a graph as per your determination in (a). Label the breakeven and shutdown price and quantity using information in (b) and (c) above. Given the market price of Pak$ 50 how many units should the firm produce? how many firms are competing in this market in short-run? How many firms will be in the industry in the long-run? How do you interpret the profit or loss condition of PakPerfect? Use a two-panel graph of the Market and…

Joe is the owner-operator of Joe's Haircuts Unlimited. Last year he earned $175,000 in total revenues and paid $110,000 to his employees and suppliers. During the course of the year, he received three offers to work for other barbers, with the highest offer being $60,000 per year. What are Joe's accounting profits? $110,000 $170,000 $65,000 $175,000 $60,000

Which of the following is NOT an example of a firm benefiting from economies of scope? Kleenex Corporation using paper products for both its facial tissue and paper towel business. Amazon leveraging its core competencies in IT systems into a wide range of online services, from retailing to cloud computing. 0 Anheuser-Busch spreading its fixed costs over millions of gallons of beer produced each year. Honda using flexible manufacturing systems for quick and low cost-switching from one product to another.