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In: Economics
Problem 1: You are the manager of Archer-Daniels Midland Company (ADM). ADM uses corn to produce...
Problem 1: You are the manager of Archer-Daniels Midland Company (ADM). ADM uses corn to produce high fructose corn syrup (HFCS) and corn oil (e.g., Mazola). Assume that the production of corn oil is positively related to the production of HFCS. Write out a cost function and show that there are cost complementarity and economies of scope in the production of HFCS and corn oil. Problem 2: Given the solution to problem 1, assume that you would like to increase production of HFCS and corn oil. So you have decided to add night-shift to the production of these two products. The justification you have given your boss is that adding the night-shift does not increase fixed costs in the short-run. Based on economic theory, explain your justification
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
You're the manager of Archer-Daniels Midland Company (ADM). ADM uses corn to produce high fructose corn...
You're the manager of Archer-Daniels Midland Company (ADM). ADM
uses corn to produce high fructose corn syrup (HFCS) and corn oil
(e.g., Mazola). Assume that the production of corn oil is
positively related to the production of oil. Write out a cost
function and show that there are cost complementarity and economies
of scope in the production of HFCS and corn oil.
Based on the solution to the last question, assume that you
would like to increase production of HFCS...
Archer Daniels Midland Company is considering buying a new farm that it plans to operate for...
Archer Daniels Midland Company is considering buying a new farm
that it plans to operate for 10 years. The farm will require an
initial investment of $12.1 million. This investment will consist
of $2.3 million for land and $9.80 million for trucks and other
equipment. The land, all trucks, and all other equipment are
expected to be sold at the end of 10 years for a price of $5.1
million, which is $2.0 million above book value. The farm is...
Archer Daniels Midland Company is considering buying a new farm that it plans to operate for...
Archer Daniels Midland Company is considering buying a new farm
that it plans to operate for 10 years. The farm will require an
initial investment of $12 million. This investment will consist of
$2 million for land and $10 million for trucks and other equipment.
The land, all trucks, and all other equipment are expected to be
sold at the end of 10 years for a price of $ million, which is $2
million above book value. The farm is...
This question is about the Archer Daniels Midland price fixing scandal. Answer the first three parts...
This question is about the Archer Daniels Midland price fixing
scandal. Answer the first three parts before watching the video.
Read in your book the introduction to the chapter titled “Price
fixing and repeated games”. You can use any additional sources to
answer the following questions.
a. Write a few lines describing the company Archer Daniels
Midland. Where are they located, what kind of products do they
sell.
b. What is “price fixing”, why do some countries including the
US...
Consider additional data for Archer-Daniels-Midland for fiscal years ending June 30, 2010 and 2011, in millions:...
Consider additional data for Archer-Daniels-Midland for
fiscal years ending June 30, 2010 and 2011, in
millions:
Fiscal Year End
(in millions)
June 30, 2011
June 30, 2010
Sales
$80,676
$61,682
Cost of goods sold $76,376
$57,839
Fiscal Year End
(in millions)
June 30, 2011
June 30, 2010
Accounts receivable $9,816
$6,122
Inventories
$12,055
$7,871
Accounts payable $11,165
$8,115
Calculate the DSO, DIO, and DPO for fiscal years ending
June...
Two farmers produce corn on adjacent plots of land. Farmer 1 uses groundwater to irrigate her...
Two farmers produce corn on adjacent plots of land. Farmer 1
uses groundwater to irrigate her crop while farmer 2 uses surface
water. When farmer 1 utilizes groundwater, she imposes an external
cost on farmer 2, since groundwater use leads to depletion of the
surface water that is available to farmer 2. In particular, the
profit function for farmer 1 is ∏1 = 8z - 1/2z^2. While
the corn production function for farmer 2 is ∏2 = 10x - x^2 -...
A firm uses corn as an input into their production of ethanol. You require 1 bushel of...
A firm uses corn as an input into their production of
ethanol. You require 1 bushel of corn to produce one
gallon of ethanol. Each gallon of ethanol sells for
$4. Fixed costs are $12, and you can produce and sell 10
gallons of ethanol this year. Corporate taxes on profits
follow a progressive pattern, and are as follows:
Tax Bracket
Tax rate
First $4 of pre-tax profit
10%
Next $6 of pre-tax profit
15%
Next $8 of pre-tax profit
40%
Pre-tax profit greater...
A firm uses corn as an input into their production of ethanol. You require 1 bushel of...
A firm uses corn as an input into their production of
ethanol. You require 1 bushel of corn to produce one
gallon of ethanol. Each gallon of ethanol sells for
$4. Fixed costs are $12, and you can produce and sell 10
gallons of ethanol this year. Corporate taxes on profits
follow a progressive pattern, and are as follows:
Tax Bracket
Tax rate
First $4 of pre-tax profit
10%
Next $6 of pre-tax profit
15%
Next $8 of pre-tax profit
40%
Pre-tax profit greater...
Suppose a country uses Land to produce either wheat or corn. Each unit of Land produces...
Suppose a country uses Land to produce either wheat or corn.
Each unit of Land produces either 3 Corn or 4 Wheat. The country
has 1200 units of land.
a) What is the opportunity cost of corn?
b) If the country produces 2400 Wheat, how much Corn can they
produce?
c) If they increase Corn production by 300 how much will they
reduce Wheat production?
d) Is the combination 1500 units of Corn and 3200 units of Wheat
Efficient, Inefficient...
To produce a pound of candy corn, Brach’s Candy Company, can use either a pound of...
To produce a pound of candy corn, Brach’s Candy Company, can use
either a pound of cane sugar, a pound of beet sugar, or a
combination of these two inputs that equals 1 pound.
a. Draw three different isoquants for the production process.
Make sure to label your axes and intercepts.
b. Write out an equation for the production function.
c. What is the MRTS (you can pick the order) for this production
function? Interpret the meaning of the MRTS.
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