If a firm chooses to produce output in the short run, how much output will it produce. Explain why the firm will choose that quantity. Which quantity of output is best for the overall society? Explain why that quantity is so good for society. Will the ideal quantity of output for the firm be the same quantity as the ideal quantity for society? Explain.
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- Based on your answers to the WipeOut Ski Company in Exercise 7.3, now imagine a situation where the firm produces a quantity of 5 units that it sells for a price of 25 each. What will be the companys profits or losses? How can you tell at a glance whether the company is making or losing money at this price by looking at average cost? At the given quantity and price, is the marginal unit produced adding to profits?Automobile manufacturing is an industry subject to significant economies of scale. Suppose there are four domestic auto manufacturers, but the demand for domestic autos is no more than 2.5 times the quantity produced at the bottom of the long-run average cost curve. What do you expect will happen to the domestic auto industry in the long run?How would an improvement in technology, like the high-efficiency gas turbines or Pirelli tire plant, affect me lung-nm average cost curve of a firm? Can you draw the old curve and the new one on the same axes? How might such an improvement affect other firms in the industry?
- Dr. D. is a critic of standard microeconomic analysis.In one of his frequent tirades, he was heard tosay, ‘‘Take the argument for upward-sloping,long-run supply curves. This is a circular argumentif I ever heard one. Long-run supply curves aresaid to be upward sloping because input pricesrise when firms hire more of them. And that occursbecause the long-run supply curves for theseinputs are upward sloping. Hence, the argumentboils down to ‘long-run supply curves are upwardsloping because other supply curves are upwardsloping.’ What nonsense!’’ Does Dr. D. have apoint? Explain clearly.What specific data must a firm examine to decide the quantity of product it should produce to make maximum profit? How will the firm know if it should produce at all? How will the firm know if it mak a an economic profit?The nation of Ectenia has 20 competitive appleorchards, all of which sell apples at the world priceof $2 per apple. The following equations describethe production function and the marginal product oflabor in each orchard:100100 2 ,2 5 25 2Q L LMPL Lwhere Q is the number of apples produced in a day,L is the number of workers, and MPL is the marginalproduct of labor.a. What is each orchard’s labor demand as a functionof the daily wage W? What is the market’s labordemand?b. Ectenia has 200 workers who supply their laborinelastically. Solve for the wage W. How manyworkers does each orchard hire? How much profitdoes each orchard owner make?c. Calculate what happens to the income of workersand orchard owners if the world price doubles to$4 per apple.d. Now suppose that the price is back at $2 perapple but a hurricane destroys half the orchards.Calculate how the hurricane affects the income ofeach worker and of each remaining orchard owner.What happens to the income of Ectenia as a whole?
- Please don't copy ans Economics You are the owner of a motorbike company that currently has two different factories, an old one and a new one. The old factory uses an old technology that requires large amounts of labor to produce motorbikes. The production technology for the old firm is given by Fo(L) = m*L^1/2 . The new factory uses a much more modern production technology given by Fn(L) = n*L^1/2 . a. What are costs as a function of output for each individual factory? b. Suppose that you want to produce 1000 motorbikes. How many motorbikes will you produce at the old factory and how many will you produce at the new factory? c. Derive an expression for the total cost of producing y motorbikes (assuming that you always divide production between the factories in the optimal way). How does this cost function compare to the individual factory cost functions? d. It turns out that you can upgrade your old factory to make it just as efficient as the new factory. To pay…The table below shows the cost data of a furniture manufacturer named Cindy’s Custom Made.a) Complete the table, assuming that labour and materials cost $8 an hour. For all $ amounts, round your answers to the nearest whole number. Outputof Chairs TotalHours AverageHoursper Chair MarginalHoursper Chair TVC($) AVC($) TFC($) TC($) ATC($) MC($) 1 6 180 2 8 3 9 4 16 5 25 6 36 b) What is the most productive output? Most productive output: chairs.c) What are AVC and ATC at this quantity? AVC: $ ATC: $ d) What is the output at economic capacity? Economic capacity: chairs.The table below shows the cost data of a furniture manufacturer named Cindy’s Custom Made.a) Complete the table, assuming that labour and materials cost $8 an hour. For all $ amounts, round your answers to the nearest whole number. Outputof Chairs TotalHours AverageHoursper Chair MarginalHoursper Chair TVC($) AVC($) TFC($) TC($) ATC($) MC($) 1 6 180 2 8 3 9 4 16 5 25 6 36 b) What is the most productive output? Most productive output: chairs.c) What are AVC and ATC at this quantity? AVC: $ ATC: $ d) What is the output at economic capacity? Economic capacity: chairs. The table below shows the cost data of a furniture manufacturer named Cindy’s Custom Made.a) Complete the table, assuming that labour and materials cost $8 an hour. For all $ amounts, round your answers…
- Consider a factory that produces iPhones. This factory relies on both employees (labor) and machines (capital). Which of the following would decrease the demand forlabor?O a. Public taste shifts away from iPhones towards AndroidsO b. The price of capital falls and labor is easily substituted for capital.O c. The factory has trouble hiring competent workers (workers become less productive).O d. (b) and (a)O e. all of the abovePlease help ASAP What is the firm's fixed cost? What is the profit-maximizing level of output? Given that half of the fixed cost is avoidable and the firm produces at the optimal level of output, what is the firm's avoidable cost? Should the firm shut down its production? yes or no(a) Explain the law of diminishing marginal returns in the Theory of Production. (b) Does this law automatically imply that firms have negative returns to production?