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 (L‚ K) = LK Q (mL
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Chapter 21 A Macroeconomic Model of Monopolistic Competition: The Dixit-Stiglitz Model The RBC view of the macroeconomy is premised on perfect competition in all three macro markets (goods markets‚ labor markets‚ and financial markets). For the seminal issue of the degree of (goods) price stickiness‚ it is goods markets on which we need to focus‚ so we limit our attention to goods markets from here on. In perfect competition‚ there is a sense in which no supplier makes any purposeful‚ meaningful
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increased sales Correct Answer: interest payments on the firm’s loan. Response Feedback: Is this fixed cost that the firm has to pay regardless of advertising? • Question 2 0 out of 1 points If marginal cost is equal to average total cost‚ then Answer Selected Answer: a. marginal cost is minimized. Correct Answer: b. average total cost is minimized. • Question 3 0 out of 1 points A restaurant currently has two cooks and ten waiters. Cooks earn $10 an hour and waiters
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£75K‚ 10% increase in variable Overheads and reduction in per unit cost by £0.75*) I have used Marginal costing statements for the aforementioned evaluation because it is quite useful in for short term profit planning as compared to full cost statements due to following reasons: * For profit planning purpose‚ we need cost-volume-profit relationship data which is more readily available from marginal cost statement than fromull cost statements. * Since fixed cost is absorbed as a period cost
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addition to the marginal expenditure on physical storage and the marginal convenience yield another variable‚ a risk premium‚ is required to explain the holding of stocks as functions of price spreads. in the empirical part of the study the theory will be applied to stocks of several agricultural commodities. the risk premium for each commodity will be measured residually under specified conditions by deducting form the price spread between two periods the other two components of the marginal cost of storage
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COST CLASSIFICATION ASSIGNMENT To classify the various costs would first of all require a definition between the two types of accounting that practically all businesses have to face and a number of key terms which are equally important. These are management accounting and financial accounting. 1. THE DIFFERENCE BETWEEN MANAGEMENT & FINANCIAL ACCOUNTING: Management accounting is concerned with decision making‚ cost apportionment‚ planning and control. It is based within the organisation and is
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by quantity produced‚ AVC = VC/Q. * “As more and more of a variable input is added (i.e.‚ labor) to an existing fixed input‚ eventually the additional output one gets from that additional input is going to fall.” * If marginal productivity is rising‚ marginal costs are
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If it is true‚ explain why it is true. If it is false‚ explain why it is false and then write the statement correctly. A profit maximising perfectly competitive firm should select the output level at which the difference between the marginal revenue and marginal cost is greatest. This is equivalent to selecting the output where the spread between total revenue and total cost is greatest. In the short-run‚ it is possible for an individual firm to make an economic profit. This situation
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Operating cash flow‚ Terminal cash inflow = Salvage value of fixed asset‚ recovery of Net working capital Numerical Prakash Steel – Refer to Excel Finished Goods costing – 1. Absorption costing 2. Marginal costing Most companies use absorption costing and tax norms also say so. In DCF‚ marginal costing should be used. Employee cost is a fixed cost. Receivables on sales not COGS. If excise duty -> sales(1-e) = Net Sales. But in Working capital calculation‚ excise should be considered‚ since
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Chapter 10 (Tentative Due Date: by November 1) Question 2: Discuss the major barriers to entry into an industry. Explain how each barrier can foster either monopoly or oligopoly. Which barriers‚ if any‚ do you feel give rise to monopoly that is socially justifiable? LO1 The major barriers to entry in an industry are economies of scale‚ legal barriers such as patents & licenses and other strategic or pricing barriers. Economies of scale occur only in large firms who are able to reach a minimum
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