Given the data provided in the table below, the total revenue (TR) for production at quantity (Q) level 4 equals Q 0 1 2 3 4 5 6 7 O A. $0 OB. $1 OC. $15 D. $20 P $5 $5 $5 $5 $5 $5 $5 $5 TC $9 $10 $12 $15 $19 $24 $30 $45 TR MR MC Profit
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- If a demad function of a firm is Qd= 200-0.5p+4M+60Pr where M(income) is 100 and Pr(price of related good) is 4.TC=50-0.3Q+0.01Q^2. What is thw profit maximizing level of outputFor a firm with market power, what is the marginal revenue gained when one more unit of output is sold? Question 19Answer a. The price at which the extra unit is sold plus the rise in revenue from selling other units at a higher price b. The price of the unit of output sold minus the production cost of that unit c. The price of the unit of output sold d. The price at which the extra unit is sold less the drop in revenue from selling other units at a lower price13- Which one of these will continuously increase as more products are produced? a. Average fixed cost b. Fixed cost c. Variable cost d. None of the choices
- Highest price where quantity of output is equal to zero = R1200P*= R650MC at Q*= R260AVC at Q*= R150AFC at Q*= R300Price at allocative efficient output level = R400Allocative efficient level of output = 180 unitsTotal fixed cost = R33000MC at output equal to zero = R100 1.1. Assuming profit maximising behaviour, calculate each of the following for Firm M. ATC = RQ*= unitsProfit / loss = RLerner index = Mark-up = Consumer surplus = RDeadweight-loss = RTVC = RSITUATION: You are thinking about becoming a Paradise Coffee franchisee. Franchisees are offered a business specializing in producing an exclusive line of exotic coffee drinks (similar to Starbucks). Franchisees have had good success in towns without a Starbucks (Paradise franchises gross $220,000 sales on average per year, and you believe you can gross as much, too). You will have to pay Paradise Coffee, Inc., a franchise fee of $3,000 a year plus 2.5% of gross sales. You will also pay an annual National advertising fee of 3% of gross sales. Paradise requires that you use their logo-imprinted goods (plates, cups, napkins). They are purchased in bulk from Paradise and will cost you $40,000 per year. You also have to use their special Paradise Roast coffee beans, which cost $12.00 per pound. You estimate you will use 400 pounds of beans a year. Other food ingredients (syrups, biscotti, whipped cream, soft drinks, etc) will cost $18,000 a year. You will have to hire three…1] TEXplor has purchased a 2-year lease on land adjacent to the land leased byClampett. The land leased by TEXplor lies above the same crude oil deposit. Assume each company sinks wells of the same size at the same time. If both companies sinkwide wells, each will extract 2 million barrels in 6 months, but each company willreceive profit of only GHC 1 million. On the other if each company sinks a narrowwell, it will take a year for Clampett and TEXplor to extract their respective shares,but their profits will be GHC14 million apiece. Finally, if one company drills a widewell while the other company drills a narrow well, the first company will extract 3million barrels and the second company will extract only 1 million barrels. In thiscase, the first company will earn profits of GHC 16 million and the second companywill actually lose GHC 1million.1. Illustrate this using a normal form game. 2. Does either firm have a strictly dominant strategy? If yes, what is (are) thesestrategies?…
- Show the effect of a 25% profit tax on the accounting profit of all firms in a competitive industry. Consider all time periods.Wonopoly and natural resource prices Suppose that a firm is the sole owner of a stock of a natural resource. a. How should the analysis of the maximization of the discounted profits from selling this resource (Equation 17.63 be modified to take this fact into account? b. Suppose that the demand for the resource in question had a constant elasticity form q(t)=a[p(t)]b . How would this change the price dynamics shown in Equation 17.67? c. How would the answer to Problem 17.7 be changed if the entire crude oil supply were owned by a single firm?Management believes it can sell a new product for $8.50. The fixed costs of production are estimated to be $6,000, and the variable costs are $3.20 a unit. Complete the following table at the given levels of output and the relationships between quantity and fixed costs, quantity and variable costs, and quantity and total costs. Quantity Total Revenue Variable Costs Fixed Costs Total Costs Profits (Loss) 0 500 1,000 1,500 2,000 2,500 3,000 Determine the break-even level using the above table and use the following Equation to confirm the break-even level of output. PQB = FC + VQB PQB - VQB = FC QB (P-V) = FC QB = FC P-V What would happen to the total revenue schedule, the total cost schedule, and the break-even level of output if management determined that fixed costs would…
- W7 Q5 A paper published in the Harvard Business Review points out a new way to calculate economic profit that could be more appropriate for service firms and other people-intensive companies. Instead of focusing on investment and return on investment, the focus is on employee productivity, in terms of both generating revenues and reducing costs. The approach is to first determine economic profit in the conventional way, except that we ignore taxes, so that economic profit is before tax, as follows: Economic profit = Operating profit − Capital charge Assume the following information for a hotel chain that wishes to adopt the new method. The firm has $100 million in operating profit, has $1 billion in investment, and uses a cost of capital rate of 5%, so the capital charge is $50 million and the economic profit is $50 million. Relevant calculations are contained in Part 1 of the following schedule: Part 1: Economic Profit (in thousands, except cost of capital rate) Revenue…A computer company produces affordable, easy-to-use home computer systems and has fixed costs of $250. The marginal cost of producing computers is as indicated below. Output Fixed Cost Variable Cost Total Cost Marginal Cost Average Cost Average Variable Cost 1 $250 $700 $950 $700 2 $250 $925 $1175 $225 3 $250 $315 4 $250 $360 5 $250 $400 6 $250 $450 7 $250 $550 Complete the table. Round off to the nearest dollar. At what price is the zero-profit point? At what price is the shutdown point?Title TC = 160(Q) – 20(Q)2 + 1.2(Q)3.Calculate the total, marginal and average costs for the first ten... Description TC = 160(Q) – 20(Q)2 + 1.2(Q)3.Calculate the total, marginal and average costs for the first ten quantities (in R million).
