Refer to the information provided in Figure below to answer the question that follow. 24 820 18 D 4 elect one: D D 0 D Refer to Figure This farmer's profit-maximizing level of output is of output. a. 500 b. 350 100 c. 700 d. 100 MC ATC P = MR 350 500 700 9 Bales of hay units
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- It costs $250 to produce an X-Box. We are trying todetermine the selling price for the X-Box. Prices between$200 and $400 are under consideration, with demand forprices of $200, $250, $350, and $400 given below. SupposeMSFT earns $10 in profit for each game that an X-Boxowner purchases. Determine the optimal price andassociated profit for the case in which an average X-Boxowner buys 10 games. Console Price ($) Demand200 2.00E06250 1.20E06350 6.00E05400 2.00E05Unit cost $250A food manufacturer is trying to maximize profit by selling wheat-based cereal (C) and wheat bread(B) with raw wheat (W). The production functions are: Cereal: C = 28WC – 1.5WC2 Bread: B = 66WB – 2WB2 Constraint: WC + WB = 7,058 Profit is $1.00 per box of cereal and $0.50 per pack of wheat bread. There are 7,058 units of raw wheat available. How much wheat should go to the cereal (WC)? Enter as a value. ROUND TO THE NEAREST WHOLE NUMBER.A tuition agency hires tutors to teach students. The following table displays how total outputincreases as tutors increase.No. of Tutors 1 2 3 4 5Total No. ofStudents4 10 18 24 3Tutors cost $50 each regardless of how many students each tutor has. The agency paid $500 in non-refundablemarketing fees to set up the business as a fix cost. In the short run, considering the shut-down condition, whatis the lowest price per student Tom’s tuition agency can charge? Explain your answer.
- 1. Mzanzi-Ndizvo (Pty) is a vaccine manufacturing company that has the following costs ofproduction. Cost of capital is R50 000, labour cost is R30 000, and the total cost the firm is willing to pay is R300,000. Identify the type of this production function and Illustrate it with a 2D graph. 2. If the demand and supply curve for cell phones is given by: D = 80 - 4P, S = 40 + 6P In a market with a price of P for smartphones, compute the number of phones that would be bought and sold at equilibrium.ADJ Enterprises produces hydrothermocorticoids. The table below shows the costs of producing various quantities of hydrothermocorticoids. Quantity Total Cost Average Cost 0 $0 -- 1 $10 $10.00 2 $12 $6.00 3 $15 $5.00 4 $19 $4.75 5 $24 $4.80 6 $30 $5.00 7 $45 $6.43 ADJ sells its hydrothermocorticoids for $5 each (that is the price regardless of the number of hydrothermocorticoids it sells). Use the Profit-Maximizing Rule to explain the quantity that ADJ should produce to maximize its profits. You may use a calculator. You should explain the details of any calculation you perform. You should identify, explain, and apply the concept you use to answer this question. To receive full credit, your explanation must show all steps in any calculations you perform. Your explanation must also incorporate the profit-maximizing rule – state what that rule is and explain how it applies to ADJ’s situation. Note that it is…A computer store sells WP and SS. Given below are themaximum amounts two consumers will pay for these goods and for a bundle that contains bothgoods. WP SS Bundle carolina $100 $90 $190 shawn $90 $40 $130 (a) What is the firm’s revenue if it sells the WP at a price of $90 and the SSat a price of $90? The goods are only available individually and not as a bundle. Please showyour calculations.(b) Will the firm charge $130 or $190 for the bundle if it wants to earn maximum revenue?Assume that the goods are only sold as a bundle and not available separately. Please explain.(c) Will selling individually or selling a bundle result in higher revenues?
- A company is considering building a bridge across a river. The bridge would cost $2 million to build and nothing to maintain. The following table shows the company's anticipated demand over the lifetime of the bridge: Price Quantity (Dollars per crossing) (Thousands of crossings) 8 0 7 100 6 200 5 300 4 400 3 500 2 600 1 700 0 800 If the company were to build the bridge, its profit-maximizing price would be $ ? , and it ( would or would not)? produce the efficient level of output. If the company is interested in maximizing profit, it (should , or should not)? build the bridge because profit would be . (Note: If the company incurs a loss, be sure to enter a negative number for profit.) If the government were to build the bridge, it should charge a price of $ ? True or False: The government should build the bridge. True or FalseBuddies Production Costs Quantity of Ear Buds MC ($) ATC ($) 10 - 5.00 15 2.00 4.00 20 2.44 3.61 25 3.56 3.60 30 4.02 3.67 35 5.49 3.93 40 5.93 4.18 45 8.59 4.67 If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddies profit or loss be per week? $ d. Now assume the market price is $5.50 per pair, and Buddies produces the profit-maximizing quantity of ear buds. What will Buddies profit or loss be per week? $You are working for the chiefeconomist at Microsoft. Microsoft’s only significantcosts to producing and distributing a new version itit’s operating system is $30,000 in wages to itsemployees, $15,000 in computer testing, and$5,000 in utilities. Microsoft’s marketing department estimates that thedemand a new version it it’s operating system is Q = 320 – 0.5 P, with Pmeasured in dollars.What price should Microsoft charge for a new version it it’s operatingsystem? What profit should Microsoft expect?
- Return to Figure 9.2. Suppose P0 is $10 and P1 is$11. Suppose a new firm with the same LRAC curve asthe incumbent tries to break into the market by selling4,000 units of output. Estimate from the graph what thenew firm’s average cost of producing output would be.If the incumbent continues to produce 6,000 units, howmuch output would the two firms supply to the market?Estimate what would happen to the market price as aresult of the supply of both the incumbent firm andthe new entrant. Approximately how much profit wouldeach firm earn?Continuing your analysis of the competitive US manufacturing industry from Question 1, withdemand of Qd = 500 – 8P and supply of Qs = 4P – 100, suppose a technological innovationcauses the supply curve to increase, shifting the curve down by $15 for every given quantity Q. Determine the new supply equation. Solve for equilibrium price P2 and quantity Q2. Depict the original supply S1, the new supply S2, and the original demand D1 on theusual P, Q diagram. Label all intercepts (including two intercepts for the demand curveand one intercept for the supply curve). Clearly indicate and label the new marketequilibrium. Graphically indicate the areas of Consumer Surplus (CS2) and Producer Surplus (PS2)that resulted from the new market equilibrium. Compute the values of Consumer Surplus (CS2) and Producer Surplus (PS2) associatedwith the new market equilibrium, clearly indicating the units that CS and PS aremeasured in. Who has benefited from technological innovation, based on the…Assume that there is only a single seller of papadums, and she knows eachbuyer’s willingness to pay. Assume that this seller incurs a cost of $4.00 perunit of papadum produced (i.e., the marginal cost is constant). If she intends to maximise profits, how many papadums would this seller supply to the market, and what price would she charge? Remember, the price has to be the same for each unit sold. Hint: start at a price of $17 and calculate what profit would be. Then lower the price just enough to attract an additional buyer and calculate what the new profit would be. Repeat this until all four buyers are purchasing the good and then check which price yields the highest profit. Alternatively, you can calculate the marginal revenue from lowering the price to attract an additional buyer and compare it to marginal cost.