= 1200000 S = 4 M = 18 b. Cost function = 30000S + 60000M Marginal cost of S = 30000 Marginal cost of M = 60000 Total marginal cost = 90000 c. (iv.) a. Demand…Q = a – bP E = (P/Q)*(∆Q/∆P) E = -b (P/Q) -0.4 = -b(4/2) b = 0.2 a = Q + bP = 2 + 0.2 * 4 a = 2.08 Demand Equation…Q = 2.08 – 0.2P 2.(i) Q = LK ∂Q∂L = K ∂2Q∂L2 = 0 The second order derivative did not give a negative value‚ so it ignores the condition of diminishing marginal productivity of labor. b. Q
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number of years and it’s understandable that a monopoly would want to restrict the usage of their research and hard work. Similarly if the price slashes are pushing out competition‚ they are at the same team encouraging competitors to reduce their costs/price which is great for
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Production and Cost Analysis in the Short-Run Chapter 5 Production Function 2 A production function describes the relationship between a flow of inputs and the resulting flow of outputs in a production process during a given period of time. Q = f(L‚ K‚ M‚ …) where Q = quantity of output L = quantity of labor input K = quantity of capital input M = quantity of materials input Copyright © 2010 Pearson Education‚ Inc. Publishing as Prentice Hall Fixed and Variable Inputs A fixed input
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Rs. -> by spending 25 Cr. Rs.‚ the plant wont be operational at half the capacityS The Capex decisions are irreversible Projected P&L : Less Sales Raw Materials Utilities Employee Cost Depreciation Sales and Distn. Repair and maintenance + Administrative Exp. Int. on Working capital Total Cost PBT Tax PAT PAT + Depreciation Non manufacturing Expenses x Cash outflow‚ Inflow: Cash outflow – Investment‚ Incremental working capital (as all the capacity won’t be utilised in
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Raggs‚ Ltd.‚ a clothing firm‚ determines that the marginal profit and marginal cost are given by ‚ . Find the total revenue if R(0) = 3000. 1‚ The distance profit is given by the definiteinte gral of (P’(x)) Px=P’x=150-0.5xdx =150x-0.25x2+CThe distance cost is given by the definiteinte gral of (C’(x)) Cx=C’x=4000+0.25x2dx =4000x-112x3+CWe have the total revenue is R(x) = P(x) + C(x) Cx=150x-0.25x2+C+4000x+112x3+C =112x3-0
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FORMATIVE WORK FOR ECONOMICS In this article‚ we will consider how a price-taking profit maximising business in perfect competition changes according to the change of the fixed factor cost-capital. A i) The short-run marginal cost (MC) curve of each business remains the same‚ but the short run AC curve of each business shifts downwards. Perfect competition is an industrial structure that includes many firms selling an identical product to many buyers and has no restrictions for new firms to entry
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source same End result ! ends with financial statements ! integral part of other business aspects B. Cost Accounting Terminology 1. Nature of Cost Cost - A sacrifice of resources: Cost is a measurement in monetary terms of the amount of resources used for some purpose. Expense - The cost charged against revenue in a particular accounting period. 2. Purposes of Gathering Cost Information Routine decision making:
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table: Labor Input I (No. of Workers) Total Product Marginal Product Average Product 1 3 0 + 3 = +3 3/1 = 3 2 6 6 – 3 = +3 6/2 = 3 3 16 16 – 6 = +10 16/3 = 5.33 4 29 29 – 16 = +13 29/4 = 7.25 5 43 43 – 29 = +14 43/5 = 8.6 6 55 55 – 43 = +12 55/6 = 9.17 7 58 58 – 55 = +3 58/7 = 8.29 8 60 60 – 58 = +2 60/8 = 7.5 9 59 59 – 60 = -1 59/9 = 6.56 10 56 56 – 59 = -3 56/10 = 5.6 b. Plot the (i) total product‚ (ii) marginal product‚ and (iii) average product functions. c. Determine
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CHAPTER 6 COST BEHAVIOR TYPES OF COST BEHAVIOR PATTERNS 1. Variable Cost 2. Fixed Cost 3. Mixed / Semi-variable Cost Cost Structure – the relative proportion of fixed‚ variable‚ and mixed costs found within an organization or firm. 1. Variable Cost - its total dollar amount varies in direct proportion to changes in the activity level. Example: Number of Trucks Radiator Cost per Total Radiator
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Opportunity Cost Lets start with a small introduction to the topic Opportunity Cost. Opportunity cost is the cost of any activity measured in terms of the value of the next best alternative forgone (that is not chosen). It is the sacrifice related to the second best choice available to someone‚ or group‚ who has picked among several mutually exclusive choices. The opportunity cost is also the "cost" (as a lost benefit) of the forgone products after making a choice. Opportunity cost is a
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