1994‚ the average variable cost is equal to marginal cost for a typical producer in the industry. Assume all producers are in the situation of constant returns‚ so that the cost function must be linear. From the case‚ average variable cost is equal to total electricity cost plus total Alumina cost plus other raw materials plus consumables plus freight which in total sums up to $925. With constant returns‚ the average variable cost is equal to marginal cost which is $925. If the smelter is rational
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3rd Edition‚ June 2005 Eric Doviak Principles of Microeconomics on the Lecture Notes Preface Microeconomics is the study of the behavior of individual households‚ firms and industries as well as the supply and demand relationships between producers and consumers. You might think of a household as a consumer‚ but households are also producers. For example‚ take a look at your kitchen: you take raw materials (meat‚ cheese‚ vegetables‚ eggs‚ salt and pepper) as well as capital
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more influence over the market price than producers do. c. government intervention prevents firms from influencing price. d. producers agree not to change the price. Suppose a firm in a competitive market received $1‚000 in total revenue and had a marginal revenue of $10 for the last unit produced and sold. What is the average revenue per unit‚ and how many units were sold? a. $5 and 50 b. $5 and 100 c. $10 and 50 d. $10 and 100 When a profit-maximizing firm in a competitive market has zero economic
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Explicit cost * Normal profit is the minimum level of profit that keeps the factors of production in the long run * Profit maximization can only happen when the marginal revenue or price is equal to the marginal cost and marginal cost is increasing. a. Bowmen’s Accounting profits is equal to (total revenue – explicit costs) | $ | $ | Revenue | | 500000 | | | | (-) Explicit costs | | | Variable operating cost | 4500000
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not dependent on the level of goods or services produced by the business. You can see the fixed costs curve at 1-1. Variable costs: Variable costs are expenses that change in proportion to the activity of a business. Variable cost is the sum of marginal costs over all units produced. It can also be considered normal costs. You can see the variable costs curve at 1-1. The total costs equal to fixed costs plus variable costs.(TC=TFC+TVC) 1.0.1.2 Chart Chart
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neither profits nor losses. Thus‚ the firm is better off producing nothing. 2) Jacob’s total variable cost function has been calculated to be TVC = 100Q + 30Q² - Q³‚ where Q is the number of units of output. a. When marginal cost is a minimum‚ what is the output level? Marginal cost = dTVC/dQ = 100 + 60Q -3Q² ‚ dMC/dQ= 60 - 6Q = 0‚ 6Q = 60‚ Q = 10 Therefore‚ the output level is 10 units. b. When average variable cost is a minimum‚ what is the output level? Average variable cost = TVC/Q = 100
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Arjun R. Sabhaya Production 529 Hamptonshire Express October 16‚ 2012 PROBLEM #1 A. The simulated function given in the Excel spreadsheet “Hamptonshire Express: Problem_#1” allows the user to find the optimal quantity of newspapers to be stocked at the newly formed Hamptonshire Express Daily Newspaper. Anna Sheen estimated the daily demand of newspapers to be on a normal standard distribution; stating that daily demand will have a mean of 500 newspapers per day with a standard deviation
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services and information services. In each of these cases the relevant technologies involve high fixed costs‚ significant joint costs and low‚ or even zero‚ marginal costs. Setting prices equal to marginal cost will generally not recoup sufficient revenue to cover the fixed costs and the standard economic recommendation of "price at marginal cost" is not economically viable. Some other mechanism for achieving efficient allocation of resources must be found. The outcome of this investigation is that (i) efficient
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| Jen Poe | | | | | | | BUS657 Corporate Managerial Finance | | | | | | | | | | | | | Week #5 | | | | | | | Assignment - Chapter 22 Mini - Case | | | | | | | | | | | | | | | | | | | 1) Calculate BB’s current cash conversion cycle. | | | | | | | | | | | | | BB’s Ratios: | | | | | | | Average Age of Inventory | $842‚020 / [(0.57 *$43‚803‚000) /365] | | 12.31 | days | | Average Collection Period | $3‚240‚222/($43
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perfectly elastic and price equals marginal revenue. Short-run profit maximization by a competitive firm can be analyzed by comparing total revenue and total cost or applying marginal analysis. A firm maximizes its short-run profit by producing that output at which total revenue exceeds total cost by the greatest amount. <br> <br>A complete firm maximizes profit or minimizes loss in the short run by producing that output at which price or marginal revenue equals marginal cost‚ provided price exceeds minimum
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