Ronald Coase noted‚“The cost of doing anything consists of the receipts that could have been obtained if that particular decision had not been taken.” For example‚ the opportunity set for this Friday night includes the movies‚ a concert‚ staying home and studying‚ staying home and watching television‚ inviting friends over‚ and so forth. The opportunity cost of taking job A included the forgone salary of $102‚000 plus the $5‚000 of intangibles from job B. Opportunity cost is the sacrifice of
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percent of the company annual sale. The operation of the group is divided into four divisions‚ NASA (North America and South America) and EROW (Europe and rest of the world)‚ Research department and Global Marketing department. NASA and EROW operate as profit centers each produce butyl and halobutyl dedicated to regional customers. Both of the centers have relatively flexible producing schedule to satisfy the increasing demand of halobutyl. After establishing the second plant in Sarnia‚ NASA is able to
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BRANCH profit center Definition A business unit or department which is treated as a distinct entity enabling revenues and expenses to be determined so that profitability can be measured. Distinctly identifiable department or unit that contributes to the overall financial results of a firm. Where adequate cost accounting systems are in place‚ profit centers are given responsibility to target certain percentages of the total revenue and are given adequate authority to control their costs to achieve
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revenue equals marginal cost of the marginal unit is greater than the revenue it brings in. Oligopolies are a market with a small number of sellers‚ where the sellers interact strategically with each other. Each player tries to guess which the competitor is trying to do. There are usually a small amount of large firms and they usually control the market. Competitive firms will use the firms marginal cost to produce the price. The price of the good must be lower than the cost to produce it. To maximize
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Building Q plants costs each firm 3.5 × Q dollars. Each plant produces one unit of SOMA. If firm 1 builds Q1 plants and firm 2 builds Q2 plants‚ the market price p for one unit of SOMA will be 9 − (Q1 + Q2). For example‚ if firm 1 builds 2 plants and firm 2 builds 4 plants‚ the market price will be 9 − (2 + 4) = 3 per unit. At this price firm 1 will make a profit of 2 × 3 − 2 × 3.5 = −1 while firm 2 will make a profit of 4×3−4×3.5 = −2. Assume‚ no firm will build more than 4 plants. Cost (Q) = 3.5 *
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Theory Chapter 19: Profit Maximization Problem Instructor: Hiroki Watanabe Summer 2009 1 / 49 Intro SPMP Comparative Statics LPMP Factor Demand Returns to Scale Σ 1 2 3 4 5 6 7 Introduction Overview Short-Run Profit Maximization Problem Definitions Short-Run Profit Maximization Problem Solution to Short-Run Profit Maximization Problem Example Interpretation Comparative Statics Long-Run Profit Maximization Problem Solution to Long-Run Profit Maximization Problem
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Name: Thuy Anh Nguyen November 6‚2012 1. Conditions for profit maximization are: a) Difference between total revenue (TR) and total cost (TC) is maximized; b) Marginal revenue (MR) should be equal to marginal cost (MC) Explanations: If we assume that the company is facing a downward – sloping curve and it produces just one single product a) Profit = TR – TC. Profit will increase if TR increases and TC decreases. If company wants profit maximization‚ it should be TR maximization and TC minimization
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33yd | Lab. Manual: Length | 271cm | 2.71m | 10.20in | 0.28yd | Lab. Manual: Width | 208cm | 2.08m | 8.60in | 0.24yd | B. Graduated Cylinder Volume reading when graduated cylinder is half filled with | (mL) | Potassium permanganate(KMnO4) | 12.6mL | Distilled Water (H2O) | 12.3mL | | Capacity of Apparatus (maximum volume contained) | Big test tube | 18.8mL | 250-mL Beaker | 50mL | C. Pipette Pipettes | Drawing of a part of the scale | Accuracysmallest known
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2) Explain why a profit maximizing firm produces the output that equates marginal revenues to marginal costs (MR=MC). In a perfectly competitive market‚ producers are price-takers and consumers are price-takers. There are many producers‚ none having a large market share and the industry produces a standardized product‚ also free entry and exit of the industry. They produce using the optimal output rule: produce where marginal revenue equals marginal cost as Smith (1904) demonstrated. Figure
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or not. Profit maximisation Profit maximisation is the process by which a firm determines the price and output level that returns the greatest profit. There are several approaches to this problem. The total revenue - total cost method relies on the fact that profit equals revenue minus cost‚ and the marginal revenue - marginal cost method is based on the fact that total profit in a perfectly competitive market reaches its maximum point where marginal revenue equals marginal cost. Basic definitions
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