Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 7, Problem 5MC
To determine
Diseconomies of scale.
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The cost formula for a company can be modeled by C=1092+40x+0.1x2C=1092+40x+0.1x2 where xx represents the number of items made. A formula for the company's income is modeled with R=108x−0.9x2R=108x-0.9x2, where xx is the number of items sold. A company will break even when its costs equal its income.
How many items must a company make and then sell to break even? Answer: (If there are multiple answers, separate the answers with a comma.)
ABC Ltd. makes a television table that sells for $60 per unit. It has variable costs of $20 per unit and incurs fixed costs of $110,000 per period.
Create the mathematical model that represents the problem
a.P= 60X- 110,000 – 20 X
b.P= 20x- 110,000- 60 X
c.P= 60 X- 110,000X- 20
d.P= 20X- 60 – 110,000 X
Which of the following is a definition for variable costs?
a.Costs that contain a fixed and variable element
b.Costs that remain the same whatever the level of output
c.Costs that will remain fixed as output increases until the activity reaches a level where the costs have to increase sharply
d.Costs that vary directly with the number of units produced
A firm's total revenues depend on the amount produced (q) according to the function R=240 q-q^(2) Total costs also depend on q:C=q^(2)+60 q+120 a) What level of output should the firm produce in order to maximize profits? What will profits be? b) Show that the second order conditions for a maximum are satisfied at the output level found in part b)
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
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Managerial Economics: A Problem Solving Approach
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- Required information Skip to question An image shows the curves of MC, ATC, and AVC.Image shows the bar graph which represents the cost data but in their the curves are also shown in the terms of MC, ATC , AVC. At x-axis shows the Quantity and at y-axis shows the Costs. Refer to the graph above to answer this question. At what output does excess capacity exists? Multiple Choice 180. 200. Any output above 180. Any output below 180.Required information Refer to the graph above to answer this question. At what output does excess capacity exists?arrow_forwardRequired information Skip to question An image shows the curves of MC, ATC, and AVC.Image shows the bar graph which represents the cost data but in their the curves are also shown in the terms of MC, ATC , AVC. At x-axis shows the Quantity and at y-axis shows the Costs. Refer to the graph above to answer this question. At what output does excess capacity exists? Multiple Choice 180. 200. Any output above 180. Any output below 180.Required information Refer to the graph above to answer this question. At what output does excess capacity exists? GIve me correct answer with calculation adn full explanation oterwise i give multiple downvotearrow_forward(Alternative Measures of Profit) Calculate the accounting profit or loss as well as the economic profit or loss in each of the following situations: A firm with total revenues of $150 million, explicit cost of $90 million, and implicit costs of $40 million A firm with total revenues of $125 million, explicit cost of $100 million, and implicit costs of $30 million A firm with total revenues of $100 million, explicit cost of $90 million, and implicit costs of $20 million and A firm with total revenues of $250,000, explicit cost of $275,000, and implicit costs of $50,000 please i'd like to see the steps who we get the answers so i understand thank you so much :)arrow_forward
- Which of the following is most likely to be an implicit cost?*rental income foregone on assets owned by the firmsalaries paid to the firm’s board of directorstransportation cost on raw materialsinterest payments on an outstanding loan of the firm Economic profit is frequently*greater than total revenue.defined as total revenue minus total fixed cost.irrelevant to the owner of a firm who is concerned instead with accounting profits.less than accounting profit. From an economics perspective, accounting methods tend to*overstate profits and losses.overstate profits and understate losses.understate profits and overstate losses.understate profits and losses. Your aunt is thinking about opening a hardware store. She estimates that it would cost $500,000 per year to rent the location and buy the stock. In addition, she would have to quit her $50,000 per year job as an accountant. Your aunt’s opportunity costs comprise*the accounting costs.the accounting costs and the implicit costs.all…arrow_forwardIndicate whether each of the following is anexplicit cost or an implicit cost.a. A manager’s salaryb. Payments to Dell for computersc. A salary forgone by the owner of a firm byoperating his or her own companyd. Interest forgone on a loan an owner makes tohis or her own companye. Medical insurance payments a companymakes for its employeesf. Income forgone while going to collearrow_forwardA firm faces the following costs: total cost of capital = $1,000; price paid for labor = $12 per labor unit; and price paid for raw materials = $4 per raw-material unit. a. Suppose the firm can produce 5,000 units of output this year by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average total cost of producing the 5,000 units of output? b. Now assume the firm improves its production process so that it can produce 6,000 units of output this year by combining its fixed capital with 100 units of labor and 450 units of raw materials. What are the total cost and average total cost of producing the 6,000 units of output? c. If units of output can always be sold for $1 each, then by how much does the firm’s profit increase after it improves its production process? d. Suppose that implementing the improved production process would require a one-time-only cost of $1,100. If the firm only considers this year’s profit, would…arrow_forward
- Economic cost can best be defined as: Select one: a) All costs excluding labour costs b) Any obligation to labour or material suppliers c) All costs exclusive of payments to fixed factors of production d) Compensations which must be recieved by factor of production owners to insure their continued supply e) Any contractual obligations which results in a flow of money expenditures from an enterprise to factor of production suppliersarrow_forwardWhich of the ff statements are true about cost function a. It estimate the total cost of production given a specific budget b. It helps predict what the marginal cost would be to produce a product at different levels of output c. It allows management to evaluate how efficiently the production process was at the beginning of the operation period d. It helps manager understand the price behavior of the product A firm profit maximization point is where a. Total revenue Is greater than total cost b. Marginal revenue is equal to marginal cost c. Marginal revenue is greater than total cost d. Marginal cost is less than total costarrow_forwardA copy company wants to expand production. It currently has 20 workers who share eight copiers. Two months ago, the firm added two copiers, and output increased by 60,000 pages per day. One month ago, the firm added five workers, and productivity also increased by 25,000 pages per day. A copier costs about three times as much as a worker. Assume these increases in productivity per worker and productivity per copier are good proxies for future increases in productivity when hiring additional workers or purchasing additional copiers. Based on this information, the copy company should hire another worker or purchase another copier in order to expand output.arrow_forward
- Product Costs Pietro Frozen Foods, Inc., produces frozen pizzas. For next year, Pietro predicts that 50,000 units will be produced, with the following total costs: Direct materials $120,000 Direct labor 60,000 Variable overhead 25,000 Fixed overhead 220,000 Required: If required, round your answers to the nearest cent. 1. Calculate the prime cost per unit.$ per unit 2. Calculate the conversion cost per unit.$ per unit 3. Calculate the total variable cost per unit.$ per unit 4. Calculate the total product (manufacturing) cost per unit.$ per unit 5. What if the number of units increased to 55,000 and all unit variable costs stayed the same? indicate the impact on the following costs. a. Total direct materials increases by 10% b. Total direct labor increases by 10% c. Total variable overhead increases by 10% d. Total fixed overhead does not change no change e. Unit prime cost does not change no change f. Unit conversion cost decreases by less than 10% What would…arrow_forwardThere is economies of scale if the average cost of production is lower for bigger scale of operations compared to the average cost of production for smaller scale of operations True Falsearrow_forwardA printer quotes a price of $7, 500 for printing 1,000 copies of a book and $15, 000 for printing 2,500 copies.Assuming a linear relationship and that 2000 books are printed:i. Find the equation relating the total cost y to x, the number of books printed.ii. What is the variable cost ?iii. What is the fixed cost ?iv. What is the variable cost per book ?v. What is the average cost per book ?vi. What is the marginal cost of the last book printed ?arrow_forward
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