(Use for Questions 1 - 3): The Burr Corporation's total cost function is TC 2004Q+2Q2 МС - 4+40 АС %3 200/Q + 4 +2Q where TC is the total cost in dollars, Q is quantity, MC is marginal cost per additional unit, AC is average cost per unit and P is product price Which rule should Burr Corp use to select a level of output that will maximize profit? а. *AC P -МC%3D0 с. MC AC d. :МС - Р
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- Why will firms in most markets be located at or close to the bottom of the long-run avenge cost me?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 $50 million. Relevant calculations are contained in Part 1 of the following schedule: Part 1: Economic Profit (in thousands, except cost of capital rate) Revenue…Kindly assist on question 1 and 2 1The difference between zero accounting profit and zero economic profit is that. a) an economic profit of zero indicates a fair return because it includes the opportunity cost of a firms capital. b) an economic profit zero indicates unacceptable rate of return because it does not include the opportunity cost of a firms capital. c) an economic profit of zero indicates more than a fair return because it includes opportunity cost and explicit cost. d) an accounting profit of zero indicates a fair rate of return because it includes the opportunity cost of a firms capital. 2.If a corporation is sued and losses the lawsuit, it's liability to pay. a) is imposed on all stockholders, personally b) is imposed only on the corporate CEO and the board of directors. C) its limited to the assets held in the corporations name. d) is imposed on the bondholders of the corporation
- Glen Eira City Council wants to impose a tax to fish and chips shops. It is considering two types of tax:- a lump sum of 500$ on each fish and chips owner- a tax of 2$ per kg of fish and chips sold, paid by each fish and chips owner(a) Which cost curve would shift as a consequence of each type of tax? (AFC, AVC, (b) Consider the following table of long-run total cost for three different fish andATC, MC)?2. A firm can produce up to 500 units each week. If its average cost function is C(x) = 500/x + 1500 and its total revenue function is given by: R(x) = 1600x − x^2 • What production maximizes profit? What is the maximum profit for that production level? • What production makes the profit equal to zero? (that point is called the break-even point) 3. The joint cost (in thousands of euros) for two products X and Y can be given by the following formula: C(x, y) = 40 + y^2 + 3x + 2xy + (x^2) y + y^3 where x represents the quantity of product X that is produced and y represents the quantity of product Y produced. • If 12 units of product X and 20 units of product Y are produced, what are the marginal costs? • What product line should be expanded in the current level of production?Q44. Suppose that cellphone batteries can be produce using 3 different types of technologies. The table below indicates the total cost related to each technology for the amount of output produced per day. a. Samsung is considering which technology to adopt to produce its cellphone batteries. Use the information to find the average-total-cost of each technology and identify the most efficient choice of technology and plant size if Samsung would like to produce 6 batteries. b. In general, where must the marginal cost curve intersect the average total cost curve?
- Assume that the following marginal costs exist in catfish production: Quantity produced (units per day) 10 11 12 13 14 15 16 17 Marginal cost (per unit) $4 6 8 10 12 14 16 18 Price (per unit) $25 24 23 22 21 20 19 18 Quantity demanded (units per day) 10 11 12 13 14 15 16 17 Total revenue $Answer $Answer $Answer $Answer $Answer $Answer $Answer $Answer Marginal revenue $Answer $Answer $Answer $Answer $Answer $Answer $Answer (a) Complete the table above. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. (b) At what rate of output is MR = MC? Answer units (c) What price will a monopolist charge for that much output? $Answer (d) If the market were perfectly competitive, what price would prevail? $Answer (e) How much output would be produced?1. Upon signing the lease and paying 5,000 php, how large are ACME’s fixed costs? Its sunk costs?2. One day after signing the lease, ACME realizes that it has no use for the railcar. A farmer has a bumper crop of corm and has offered to sublease the railcar from ACME at a price of 4,500 php. Should ACME accept the farmer’s offer? Why or why not?Question 15 (i) Which of the following is(are) correct about how accountants and economists consider costs? Accountants consider only implicit costs Economists consider both explicit and implicit costs A: 1 only B: 2 only C: Both 1 and 2 D: Neither 1 nor 2 (ii) Which of the following statements is(are) correct for a monopoly firm and a competitive firm? Both firms earn economic profit in the long run. Both firms aim to maximize profit and produce at P = MC. A: 1 only B: 2 only C: Both 1 and 2 D: Neither 1 nor 2
- 1. Throughout this course, we have solved many optimization or profit maximizing problems. a. State the rules used for unconstrained (regular) optimization and for constrained optimization. b. Using your own words, explain the rationale behind each stated rule as if you were explaining them to someone who has not yet completed this course: c. What doe economist mean when they use the term marginal? d. State how to compute Profit and explain how account profit and economic profit provides different insights to a firm’s current operations.Q2.The management of an ‘Electronic Goods’ manufacturing company asked you to give an advice about changing its current production plan, given the following information:- Annual production plan of computers is 4200 computers.- Total cost of production is OMR 824000.- Fixed cost is OMR 320000.- Revenue function: R = 460.2Q – 0.05Q2 1-Use the above information to formulate the price function and the total cost function, and determine the following: 1) Profit-maximizing quantity.2) Profit-maximizing price.3) Maximum profit value.4) Revenue-maximizing quantity. 2-Should the company change its current annual production plan of computers in order to maximize its profit?7-16. Economists at Jensen Enterprises used time-series data to estimate the following total cost function for the firm: TC=200-2Q+0.05 Where TC is total cost and Q is the output rate. a. Determine an equation for the average cost function. Plot this function, and find the output rate that minimizes average cost. b. Is the production process characterized by decreasing, constant, or increasing returns to scale? c. If the market price of output is $4.32 per unit, is there a scale of plant that would allow the firm to earn an economic profit or at least to break even?
