Consider about a market with two businesses. Iron is produced by Firm 1 utilizing both labor-intensive machinery and human labor. It does so by selling the iron to Firm 2, which makes roofing sheets, for K1500. Firm 1 pays its employees K1000, leaving it with K500 in profit. Firm 2 purchases the iron and uses it to make roofing sheets along with staff members and equipment. Sales of automobiles bring in K3000. Out of the K3000, K1500 is used to pay for iron, K750 is distributed to company employees, and K750 is left over as profit. Required 1. What is the final cost of the produced goods? 2. How much value was added overall? How much money was made overall? 3. Identify and discuss three issues with calculating national income.

Consider about a market with two businesses. Iron is produced by Firm 1 utilizing both labor-intensive machinery and human labor. It does so by selling the iron to Firm 2, which makes roofing sheets, for K1500. Firm 1 pays its employees K1000, leaving it with K500 in profit. Firm 2 purchases the iron and uses it to make roofing sheets along with staff members and equipment. Sales of automobiles bring in K3000. Out of the K3000, K1500 is used to pay for iron, K750 is distributed to company employees, and K750 is left over as profit. Required 1. What is the final cost of the produced goods? 2. How much value was added overall? How much money was made overall? 3. Identify and discuss three issues with calculating national income.

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter18: Pricing The Factors Of Production

Section: Chapter Questions

Problem 2TY

See similar textbooks

Similar questions

Quantity of Gold Bars (in thousands) Extraction Cost (in millions of dollars) User Cost (in millions of dollars) 0 $ 10 $ 5 1 15 5 2 20 5 3 25 5 4 30 5 5 35 5 The table shows the quantity of gold bars in thousands, the extraction cost for each thousand bars (in millions of dollars), and the user cost of each thousand bars (in millions of dollars) facing the OZ Mining Company this year (all costs are marginal). Suppose that a new government regulation is going to shut down OZ's mining operation one year from now. If the current price per bar of gold is $15,000, how many bars (in thousands) should OZ extract and sell this year? Multiple Choice 2 0 1 As many as possible
Assume that we are in a long-run environment and a firm employs two groups ofworkers, medium-skilled and low-skilled (there is no capital used by this firm). Low-skilled workers are paid $7.25 per hour, whereas medium-skilled workers are paid $17. Assume that both groups of workers are normal inputs into the production process andthe government increases the minimum wage to $15. Workers in the medium-skilledgroup are happy because they believe that the firm will increase their work hours now.Are the medium-skilled workers correct in their assessment? Explain why or why not.
Assume that we are in a long-run environment and a firm employs two groups of workers, medium-skilled and low-skilled (there is no capital used by this firm). Low-skilled workers are paid $7.25 per hour, whereas medium-skilled workers are paid $17. Assume that both groups of workers are normal inputs into the production process and the government increases the minimum wage to $15. Workers in the medium-skilled group are happy because they believe that the firm will increase their work hours now. Are the medium-skilled workers correct in their assessment? Explain why or why not. Do firms respond differently in the long run to a change in the minimum wage if minimum wage workers are considered normal inputs or inferior inputs into the production process? Fully explain your answer.
Consider a firm that is perfectly competitive in the market for inputs and outputs. Thefirm hires two types of workers: low-skill (high school graduates and high school dropouts) andhigh-skill (undergraduate and postgraduate degree) workers. The firm compensates high-skilledworkers at the rate wH and low-skill workers at the rate wL. It produces the output subject to aCobb-Douglas production technologyF(L,H) = (AH)α(L)β,where H - is the amount of high-skill hours, L - the amount of low-skill hours, and A - thetechnology parameter that augments the productivity of the high-skill labour. 4. In the short run, the firm cannot increase the amount of high-skill labour . Derive the1short-run demand for low-skill labour.5. What is the substitution effect of the wage increase in the short-run?6. Derive the long-run cost-minimizing demands for high- and low-skilled labour. Show thesolution to the cost-minimization problem on the graph
1. The Al-Maskri Company in Seeb makes flower pots and receives RO 10 for each finished pot. Mr. Al-Maskri’s only factors of production are flower pot machine operators (labor) and a small building where the laborers work from. The number of flower pots per day the company produces depends on the number of employee-hours per day as shown below. The wage is RO 15 per hour. Number of pots per day Number of employee-hours per day0 05 110 215 420 725 1130 1635 22 (a) Mr. Al-Maskri’s daily fixed cost for the flower pot making machine and building is RO 60. Complete the following Table showing total revenue, variable cost, total cost, and daily profit for various quantities of daily flower pot production. Quantity of Pots per day Total RevenueRO per day Variable CostsRO per day Total CostsRO per day ProfitRO per day0 0 0 60 -605 75 -2510 15 20 105 25 30 300 35 -40 (b) The profit maximizing quantity of pots is __________ and at that number of pots the daily profit made is RO…
Table: Production of Cabinets Quantity of Labor(workers) Quantity ofCabinets Q Marginal Productof Labor(cabinets per hour) 0 0 1 5 5 2 11 6 3 16 5 4 20 4 5 23 3 6 25 2 7 26 1 8 25 -1 Reference: Ref 11-6 Table: Production of Cabinets (Table: Production of Cabinets) Use Table: The Production of Cabinets. If each cabinetmaker could be hired at no cost, how many workers would your firm employ? Select one: a. two b. seven c. six d. eight
5. The break-even point occurs when the sales amounted to (123 * 103) dinars. While in normal cases it is (189 * 10) dinars. The cost of the factory was (502 * 103) dinars, which is destroyed over a period of (15) years, by way of a paradoxical equilibrium. Another product was added with a value of (205 ** 10) dinars to be recovered over 5 years. The ratio of profit to volume will increase by (7.3%) annually, while income from sales will increase by (18%). What profit will the company achieve as a result of adding the new product?
Since most consumers spend very little on salt, a small increase in the price of salt will:A. reduce quantity demanded by a large amountB. not reduce quantity demanded by very muchC. not change quantity demandedD. increase quantity demanded by a small amount 2.Fred is considering opening a ski shop in Colorado. Assume Fred will incur the following costs: building rent= $100000/year, inventory= $250000/ year, energy=$50000/year, and labor (one clerk) = $10000/year. In addition, Fred’s current income as a computer programmer is $40000 per year. Assuming Fred would earn $ 460000 in revenues, he could expect to earn:A. an accounting profit of $10000 per yearB. an accounting profit of $ 60000 per yearC. an economic profit of $ 10000 per yearD. an economic profit of $50000 per year 3.Suppose a firm employs only capital and labour (K and L) and its production function is Q = 2KL. If the quantities of labour and capital are fixed at K =10 and L = 25, then:A. total output cannot exceed 125B.…
5. The Marginal Product of the first worker is _______ units of output 6. Diminishing Returns sets in when output is equal to_______.7. The TVC of 90 units of output is equal to ______dollars.8. The TC of 125 units of output is equal to ______dollars.9. If the market price of output is equal to $2, then this firm will realize a profitof _________ dollars.10. If the firm employs 3 workers, its TVC is equal to _________dollars. Plz solved all part I give u thumb
COURSE: MICROECONOMICS - PRODUCTION THEORY Suppose a company engaged in manufacture of wheat whose production function is represented by: Q =10KL.In addition, firm must pay wages of $200 and rent on capital is $600. It is known that firm has a budget of $30,000 for cheese production.a) Calculate break-even point of both factors of production and graph itb) What will happen if minimum wage is now fixed at $300? Graph itc) Assuming that new minimum wage at point b) is maintained and, assuming that investor demands a capital rent of $900, explain what happens to optimal factor level. Graph it
QUESTIONS are based on Carl's Jr case study article 1. Discuss what are potential sources of competitive advantage for a company? Give examples 2. Argue is a competitive advantage sustainable? Give examples 3. Conduct an analysis of the strengths, weaknesses, opportunities, and threats (a SWOT analysis) of Carl’s Jr. 4. What changes should Carl’s Jr. make in order to develop a sustainable competitive advantage? (Hint: to help answer this question, think of how you might further segment the YHG group that Carl’s Jr. is trying to sell to, and develop a strategy around these subgroups.)
Omega Custom Cabinets produces and sells custom bathroom vanities. The firm has determined that if it hires 10 workers, it can produce 20 vanities per week. If it hires 11 workers, a can produce 22 vanities per week. It sells each vanity for $800, and it pays each of its workers $1,000 per week Which of the following it correct? 1) For the 11 th worker, the marginal profit is $600. 2) For the 11 th worker, the marginal revenue product is $2,000. 3) The firm is maximizing its profit. 4)If the firm is employing 11 workers, then its profit would increase if it cut back to 10 workers