Write down the firm’s objective and efficiency condition. Using diagrams for this problem, calculate the dynamically efficient extractions, marginal user costs, present value of scarcity rents, and present value of total net benefits for the two periods.
Q: Barnacle Industries was awarded a patent over 15 years ago for a unique industrial strength cleaner…
A: Limit Pricing strategy is one kind of price which is used to sell the product by a provider at a low…
Q: QUESTION 12: Let the production function be as follows Q = K2/3L¹/3 Find the cost-minimizing level…
A: Cost minimization problem of the producer: For the given output level of the firm and per unit cost…
Q: Which of the following would be classified as a situation where a third-party benefits from a market…
A: Positive ExternalityA positive externality is a condition in which the third party which is not a…
Q: Which of the following policies would be advocated by proponents of stabilization policy when the…
A: The stabilization policy is defined as the measures taken by the government through fiscal and…
Q: S (1) (3) (2) (4) 0 Output Refer to the above graph of a representative firm in monopolistic…
A: Industrial economics is the study and analysis of commercial financial issues utilizing abstract…
Q: Consider the simple two-variable linear regression model y = Bo + Bixi +e with unknown parameters…
A: The OLS (Ordinary Least Squares) criterion is used to find the best-fitting linear regression line…
Q: Suppose the imaginary company of Roobek is a small, Reno-based American apparel manufacturer…
A: Costs are the monetary value of expenses for supplies, services, labor, goods, equipment, and other…
Q: Suppose you are in charge of a toll bridge that costs essentially nothing to operate. The demand for…
A: Total Revenue is defined as the total earning that the firm earns from the sale of the output.
Q: A fall in the price of a good causes producers to reduce the quantity of the good they are willing…
A: A supply curve is a curve that shows the relationship between the price of a good and the services…
Q: Consider an oil-exporting economy in its long-run equilibrium. Which of the following explains the…
A: Gross domestic product refers to the price value of all finished goods and services produced within…
Q: Using Supply and Demand to Analyze Markets-End of Chapter Problem Increases in demand generally…
A: Consumer surplus is the difference between the price the consumer is willing to pay and the real…
Q: Previous qust Ruth is a senior citizen who consumes food and health care. When she retired in 2002,…
A: The cost of living index, which is a result of inflation, measures changes in the prices of…
Q: Refer to the following graph to answer the next six questions. Line 1 Vertical Axis Horizontal Asis…
A: The market for loanable funds:Loanable funds are those funds that are borrowed at an interest rate.…
Q: Which of the following creates a supply of Japanese yen in foreign exchange markets? Multiple Choice…
A: The exchange rate is the price of one country's currency expressed in terms of another country's…
Q: Which of the following is true under perfect competition? Multiple Choice O Profits are always…
A: The numerous buyers and sellers in the market mean that this particular market structure always…
Q: Table 2. The table below shows data for a very simple economy where only two goods, bread and…
A: CPI or the Consumer Price Index helps measure the average change in price of a fixed basket of goods…
Q: Consider the market for cars shown in the figure. How would a decrease in wages affect the quantity…
A: Demand curve represents quantity demanded corresponding to different price levels. Demand curve is…
Q: If Utility Function is U = 5x1/2x2 with x1 and x2 goods and p1 = $10 and p2 = $15, so if income is…
A: Utility function : U = 5x1/2x2 Price of good 1 : p1 = 10 Price of good 2 : p2 = 15Income =…
Q: If Utility function is of form U = 12x1 + 10x2 + log(x2), with prices of goods of the form p1= 5 and…
A: Utility function actually indicates the consumer preferences which lead to the consumer's purchase…
Q: Education, power, and technology can impact a country's prosperity. Discuss several factors that…
A: Education plays a crucial role in shaping a country's prosperity. A well-educated workforce is…
Q: Problems 1-6 are based on the following information: A company sells PC software whose price is…
A: Profit:Profit refers to the amount earned after all the costs are deducted from the total revenue.…
Q: Select all that apply In which of the following four ways can businesses benefit society? By…
A: Businesses are organizations that participate in economic activity by providing buyers with goods…
Q: j. Can you verify that the post-merger total welfare strictly increases in the synergy level a? k.…
A: An oligopoly is a type of market structure in which a few larger companies control a large portion…
Q: Andrew is a deeply committed lover of croissants. Assume his preferences are Cobb-Douglas over…
A: The provided utility function is as follows: Utility function: U (C, N ) = C0.5 N0.5In the given…
Q: QUESTION 1 For the production function Q = KO.2L0.1 and the budget 133 = 7K + 5L find the optimal…
A: Utility means satisfaction.Marginal utility is the utility derived from the consumption of an…
Q: Table 13-4 Charles's Math Tutoring Number of Workers 13 14 Output (number of students tutored per…
A: The sum of fixed costs, which remain constant regardless of production level, like rent, and…
Q: "A decrease in supply will lead to an increase in the price, which decreases demand, thus lowering…
A: Supply refers to the quantity of goods or services that a seller is willing and able to sell at a…
Q: (Table: Equilibrium Price, Quantity) Refer to the table. If the demand curve for the product shifted…
A: Equilibrium is the state of rest for the economy. It is the point from where the economy would not…
Q: 1. Aggregate supply definitions The short-run aggregate supply curve shows: What happens to output…
A: Aggregate supply refers to the total quantity of goods or services that a nation produce in a period…
Q: Suppose you are given the following data (in persons): Category Total Population No. of Persons…
A: Unemployment is a situation in which the individual is willing to work at the market wage rate but…
Q: What are the effects of a tax cut on consumption and savings in the presence of credit market…
A: Ricardian equivalence claims that the consequences on the national economy of funding government…
Q: The labor-force participation rate is computed as (Employed+ Adult Population) x 100. O (Labor Force…
A: The labor force alludes to the piece of the population in a given region or country that is either…
Q: Economic profits may result from: a. innovation Ob. risk taking c. exploiting…
A: Economic profit, otherwise called "pure profit" or "residual profit," is a measure of profitability…
Q: QUESTION 1 For the production function Qs = K0.6L0.7 find the returns to scale, recall that a…
A: Return to scale: It tells us that if we increase capital and labor by a factor of 't', then how much…
Q: question Ruth is a senior citizen who consumes food and health care. When she retired in 2002, she…
A: Index numbers measure the variable's changes across time periods. The index value indicates price or…
Q: If you make quarterly deposits for 24 years (beginning one quarter from now) into an account that…
A: Present value is the value of investment in today's dollar.Future value is the value of investment…
Q: Welfare and Efficiency - End of Chapter Problem a. When the forces of supply and demand lead to an…
A: Deadweight Loss: The economic inefficiency that occurs when the allocation of goods and resources in…
Q: n the Keynesian model if there is equilibrium beyond full employment which of the following is…
A: Keynesian model:Keynesian model is a model in economics that shows the relationship between the…
Q: Suppos is q2 = 350 400 450 ||« m's production process exhibits constant returns to scale. Based on…
A: The returns to scale is used to determine by how much does the output increase when all the inputs…
Q: An increase in increase in leads to a higher steady-state level of output, and an leads to a lower…
A: Steady-state refers to a long-run equilibrium condition where key economic variables, such as output…
Q: Levi Strauss has some of its jeans stone-washed under a contract with independent U.S. Garment Corp.…
A: "Operating cost per machine is $26,000 per year for the first two years after that, it increases by…
Q: Suppose there is a decrease in supply and an associated decrease in the quantity demanded. Which of…
A: Supply refers to the quantity of goods or service that a seller is willing and able to sell at a…
Q: "Everyone is hurt by inflation." That statement is: A. Correct B. Incorrect…
A: Inflation refers to the increase in the average price level of the goods and and services in an…
Q: Which of the following is true about the expected real interest rate? (A) It is equal to the nominal…
A: The real interest rate is the interest rate adjusted for inflation. It addresses the nominal…
Q: 5 3 2 A B D F G I 8 11 S 7) Use the graph above to answer this question. Initially, Spartania is an…
A: The demand curve is the downward-sloping curve. The supply curve is the upward-sloping curve.The…
Q: The following events occur one at a time: (i) The price of crude oil rises. (ii) The price of a car…
A: The demand changes when there is a change in an element other than its price.The quantity demanded…
Q: 30 25 20 15 10 K 5 0 0 Region B N Region A 5 10 13. In which region are both MPPL and MPPK negative?…
A: Option (e) none of the above.
Q: Refer to the figure above, the transitional dynamics would be caused by: O a positive TFP shock. O…
A: The solow growth model explains long-term economic growth.. Long-term economic growth depends on…
Q: The following graph displays four demand curves (PP, QQ, RR, and SS) that intersect at point V. 100…
A: The price elasticity is calculated as the percentage change in quantity demanded divided by the…
Q: Last week, 6 swedish kroner could purchase one U.S. dollar. This week, it takes 8 to purchase one…
A: Exchange rate:The exchange rate refers to the rate or value at which one country's currency is…
Suppose a firm is facing a two-period (t = 0, 1) depletable resource (e.g., oil) extraction problem. The inverse demand function of the resource is Pt=20–0.5Qt ; marginal extraction cost is MCt = $5/unit; resource stock is Q = 20 units and interest rate is r = 50%.
a) Write down the firm’s objective and efficiency condition. Using diagrams for this problem, calculate the dynamically efficient extractions, marginal user costs, present value of scarcity rents, and present value of total net benefits for the two periods.
Step by step
Solved in 3 steps with 7 images
- Which of the following describes accounting profits? Depreciation of fixed and variable assets Total revenue less explicit and implicit costs The difference between cash brought in and cash paid out Opportunity cost of resources previously owned Which of the following are based on both explicit and implicit costs? Economic profits Constant returns to scale Economies of scale Accounting profits The quantity demanded in the widget market is significantly greater than the quantity found at the bottom of the LRAC. Based on this information, which of the following is likely to occur? Only one firm will produce and sell widgets. Many firms will compete in the widget market. A monopoly will form in the widget industry. Most firms will experience diseconomies of scale. Market demand and the LRAC determine which of the following? The number of firms that will exist in an industry The number of firms with diseconomies of scale The level of output for…In 2012-2015, the price of jet and diesel fuel used by air freight companies decreased dramatically. As CEO of FedEx, you have been presented with the following proposals below to deal with the situation. Evaluate these alternatives in the context of the decision-making model. Make long-term contracts to buy jet fuel and diesel at a fixed price for the next two years and set shipping rates to a level that will cover these costs.A company is using break-even analysis to determine how many units of a new product must be sold for the product to be profitable. Which of the following actions will cause the break-even point of a product to increase? a. Reduction in the purchase price of the equipment needed to produce the product b. Reduction in the per unit production cost of the product c. Reduction in the sales price of the product d. All of the answer choices are correct.
- You have been promoted to be the new manager of Nefertiti Hotel, and you must decide where to build a new hotel. The finance department believes that Morocco is the better option due to the tax benefits of $5 million, while the marketing department estimates the present value of gross operating profits to be only $10 million in Morocco compared to $14 million in Tunisia. If it costs $15 million to build the hotel in either location, would it be more profitable to build in Morocco or Tunisia? If the hotel is located in Morocco, what would the firm's economic profits be?compute, show solution, explainThis question illustrates the argument on p.114 of the book. A and B own neighboring properties. Beneath their properties is a common well that contains 200 units of oil. The cost to A of extracting oil from the well in period t depends on the number of units of oil in the well at the beginning of the period t, ut, and the number of units of oil A extracts in period t, xAt ; specifically, the average cost of extraction for A per unit in period t is xAt /ut. The analogous cost function for B is xBt/ut. The market price of a barrel of oil is 1, there are two periods (t = 1, 2), and the discount rate is zero. The oil is a common property resource. a) (2) Suppose that A and B "unitize" and cooperatively decide how much oil to extract, and split the profit between them. The jointly profit-maximizing policy is that each extracts 50 units of oil from her well in each of the first two periods, after which the well is dry. How much discounted profit will A and B each make? b) (2) Suppose…an American multinational that sells consumer electronic products, has manufacturing facilities in three countries: Brazil, Thailand, and Canada. The average hourly wage rate, output per worker, and annual overhead cost for each location are as follows: Given the above figures, is Storm currently allocating its production resources optimally? If not, what should it do? Justify your answer. Now, suppose that Storm is planning to consolidate all its manufacturing into one facility. Where should it locate? Justify your answer.
- According to the Resource-Based View, which of the following is most likely to result in sustainable above-normal profit rates? Access to a strong CEO that can lead the firm to an unprecedented level of market share Access to intangible resources that are currently producing significant value Access to complex capabilities that are currently producing significant value Access to tangible resources that are currently producing significant value.A price-setting firm faces the following estimated demand and average variable cost functions: Qd= 800,000 − 2,000P + 0.7M + 4,000PR AVC = 500−0.03Q + 0.000001Q2 where Qd is the quantity demanded, P is price, M is income, and PR is the price of a related good. The firm expects income to be $40,000 and PR to be $53. Total fixed cost is $2,600,000. What is the profit-maximizing choice of output? a. 8,000 units b. 20,000 units c. 0 units, the firm shuts down d. 10,000 units e. 12,000 unitsState whether the following statements are true or false:a. When constant marginal cost > 0, marginal net benefit (P-MC) increases at the rate of interest.b. When the growth rate in demand exceeds the discount rate, the efficient outcome in a competitive industry will result in a larger amount of oil available for the future period than the current period.
- Ptarmigan Company produces two products. Product A has a contribution margin of $84.00 and requires 8 machine hours. Product B has a contribution margin of $133.90 and requires 13 machine hours. Determine the most profitable product assuming the machine hours are the constraint. If required, round your answers to two decimal places.You are the manager of Taurus Technologies, and your sole competitor is Spyder Technologies. The two firms’ products are viewed as identical by most consumers. The relevant cost functions are C(Qi) = 4Qi, and the inverse market demand curve for this unique product is given by P = 160 – 2Q. Currently, you and your rival simultaneously (but independently) make production decisions, and the price you fetch for the product depends on the total amount produced by each firm. However, by making an unrecoverable fixed investment of $200, Taurus Technologies can bring its product to market before Spyder finalizes production plans. Should you invest the $200? Explain.Identify whether each of the following transactions involves spot exchange, contract, or vertical integration. a. Barnacle, Inc., has a legal obligation to purchase 2 tons of structural steel per week to manufacture conveyor frames. b. Exxon-Mobil uses the oil extracted from its wells to produce raw polypropylene, a type of plastic. c. Boat Lifts R Us purchases generic AC motors from a local distributor. d. Kaspar Construction—a home-building contractor—purchases 50 pounds of nails from the local Home Depot.