1). Fixed cost per unit decreases when: a. Production volume increases. b. Production volume decreases. c. Variable cost per unit decreases. d. Variable cost per unit increases. 2). Prime cost + Factory overhead cost is: a. Conversion cost. b. Production cost. c. Total cost. d. None of given option. 3). Find the value of purchases if Raw material consumed Rs. 90‚000; Opening and closing stock of raw material
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Written by: Edmund Quek CHAPTER 6 THE THEORY OF COST LECTURE OUTLINE 1 2 2.1 2.2 2.3 2.4 2.5 2.6 3 3.1 3.2 3.3 INTRODUCTION SHORT-RUN THEORY OF COST Distinction between fixed cost and variable cost Total cost Marginal cost Average cost Relationship between marginal cost and average cost Optimum capacity LONG-RUN THEORY OF COST Cost minimisation in the long run Long-run average cost Productive efficiency References John Sloman‚ Economics William A. McEachern‚ Economics Richard G. Lipsey and
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various oligopoly firms behaviours - Topics 9-10. Linking Biz Strategy and Microeconomics: Some cases 1. How to respond ____consumers________ behavior Cf. Leather Jacket industry vs. environmental protection‚ Accommodation cost in GC vs. terrorism 2. Market __positioning______ strategy Cf. Volvo’s strategy focusing on safety in motor vehicle industry 3. _____Price__ competition Cf. Quantas vs Virgin Blue’s competition 4. ___Cost____of production/ R&D investment
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Profit maximization of a seller in a monopolistically competitive market Consider a shop that produces bagels in a monopolistically competitive market. The graph below shows its demand curve (labeled Demand){ marginal revenue curve (labeled MR){ marginal cost curve (labeled MC)‚ and average total cost curve (labeled ATC). Assume that the company is operating in the short run. DOLLARS (Dollars per bagell Me $7.00 ~-----/ ATC $5.50 $5.00 $3.80 $2.00 Demand MR 480 690 840 QUANTITY [Bagels per
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STANDARD COSTS Setting a budget is never easy as it involves predicting the future and therefore uncertainty. The process is not about getting the budget absolutely right; it is about not getting it too wrong. This budget process may be applied to most revenue budgets that deal with income and costs‚ but there is also a requirement to produce a capital budget that covers the purchase‚ sale and replacement of fixed assets. There is normally an investment limit dictated by funding availability and
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an economic activity is desirable and should be undertaken as long as the marginal benefits exceed the ____. 6). The closest example of a risk-free security is 7). The primary difference(s) between the standard deviation and the coefficient of variation as measures of risk are: 8). The ____ is the ratio of ____ to the ____. 9). If demand were inelastic‚ then we should immediately: 10). Producers’ goods are: 11). Marginal revenue (MR) is ____ when total revenue is maximized. 12). Suppose we estimate
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employees (NSHR). For the success of the project PRINCE2 (PRINCE2[1]) Process Model has been adopted as shown below Figure2 and than translated in the project vertical chain shown in Figure3. Figure2 TCE literature Transaction cost economics (TCE) theory become popular during the 80s and 90s‚ however its first definition can be found in the famous Coase’s paper on “The Nature of the Firm”. Coase‚ in contraposition with economist’s idea since Adam Smith (1776) that market mechanism
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single variable • Building a demand function and then a revenue function • Definitions e.g. Non-linear and dynamic functions; Decision-making under certainty‚ uncertainty and risk Practice Questions: x2 20 (a) Find an expression for the marginal revenue first using the limit definition and again using rules for differentiation. 1. Revenue function of producing and selling x units of a product is: R(x) = 20 x − R(x+h) = 20( x + h) − ( x + h) 2 ( x 2 + 2 xh + h 2 ) = 20 x + 20h
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charge the equilibrium market price and experience zero economic profit in the long run For firms with market power‚ strategies become more complex For a single-price producer‚ the optimal strategy is to increase production until marginal revenue is equal to marginal cost‚ which yields maximum profit Some firms with market power‚ however‚ are able to charge different prices to different customers Price discrimination refers to the practice of charging different prices to different customers for the
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the following: Profit maximizing output: *_MC=MR___Q=110________ Approximate mark up over cost ___*__There would be no mark up over cost___ In the long run‚ the price falls to $7.50. Why does this happen? *The business operates at the minimum average total cost (ATC)‚ which at $7.50 is equal to the marginal cost. Price‚ Cost What is the new profit maximizing output? _*_Minimum Average Total Cost (ATC)____Q=90_________________ $12.50 MC $10.00 ATC P=MR $7.50 $5.00 $2.50 $0.00 10 20
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