National University of Singapore EC1101E: Introduction To Economic Analysis Mid-Term Test Semester 1 (2009/2010) Answer all questions. |Production Possibilities of Motorcycles and Cars | |Combination |Motorcycles |Cars | |A |0 |6 | |B
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The accountant’s differential cost concept can be compared to the economist’s marginal cost concept. In speaking of changes in cost and revenue‚ the economist uses the terms marginal cost and marginal revenue. The revenue that can be obtained from selling one more unit of product is called marginal revenue‚ and the cost involved in producing one more unit of product is called marginal cost. The economist’s marginal concept is basically the same as the accountant’s differential
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9 1. Two car manufacturers‚ Saab and Volvo‚ have fixed costs of $1 billion and constant marginal costs of $10‚000 per car. If Saab produces 50‚000 cars per year and Volvo produces 200‚000‚ calculate the average fixed cost and average total cost for each company. On the basis of these costs‚ which company’s market share should grow in relative terms? Answer: Average total cost is average fixed cost plus marginal cost: ATC = FC/Q + MC. Volvo’s average fixed cost $1 billion/200‚000 = 5‚000 is much less
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BTEC Extended Diploma in Business Level 3 Management Accounting Unit 7 CREDIT 10 1 of 2 Contents Page Tasks Pages Task 1 A Explain two methods that compnay uses to to cost a product B Task 2 A Evaluate the break even analysis Task 1 A The two methods that organisation uses to cost a product and
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case‚ the marginal resource costs will equal the price of the good in the market. In the event the government purchases from a monopolistic market‚ there will be a shift in the demand curve to the right. The surplus on monopolistic produces increases because they will sell their goods at a high price. These high rates imply that there the social marginal cost will be less than the prices in a monopolistic market. In cost benefit analysis‚ the opportunity cost will be equal to the marginal costs. The
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patrons with ATM cards that are accepted by the machine can use the machine. Therefore the ATM is a private good. 2. a. False. Efficient provision of a public good occurs at the level where total willingness to pay for an additional unit equals the marginal cost of producing the additional unit. b. False. Due to the free rider problem‚ it is unlikely that a private business firm could profitably sell a product that is non-excludable. However‚ recent research reveals that the free rider problem is
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advertising mix to be optimal‚ MPn / Pn = MPm / Pm therefore‚ to increase the newspaper output from 6 to 8‚ Find: MPn / 500 = 8 *500 MPn = 4‚000 *500 So inquiries generated by newspaper ads would have to increase from 3‚000 to 4‚000. P7.7 Marginal Revenue Product of Labor. To better serve customers interested in buying cars over the Internet‚ Smart Motors‚ Inc.‚ hired Nora Jones to respond to customer inquiries‚ offer price quotes‚ and write orders for leads generated by the company’s Web
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Answers to Questions for Review 1. (Market Structure) Define market structure. What factors are considered in determining the market structure of a particular industry Market structure refers to the important features that determine the level of competition in an industry. These factors include (a) the number of buyers and sellers‚ (b) the products degree of uniformity‚ (c) the ease with which new firms enter or old firms exit the market‚ and (d) the ways in which firms in the industry compete
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cost of producing 2 unit of Y Marginal cost of producing the 2nd unit of Y 4aiv. The question mentions that the Caleb’s firm is monopoly so we can use the equation Marginal revenue = Marginal cost to calculate the profit-maximizing output level. To measure the marginal revenue and the marginal cost‚ the following formulas are used. It is necessary to calculate all cases of output Y to find out the answer. There is a list of marginal revenue and marginal cost in the following. Raw material
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(AVC) total variable costs divided by the number of output produce (Q). FORMULA: AVC=TVC/Q 6.Average total cost (ATC) total costs divided by the number of output produced (Q). Also defined as the cost per unit of output. FORMULA: ATC=TC/Q 7.Marginal cost (MC) changes in total costs divided by the change in output produced (Q). It is also the
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