Assume the prices of product L and K are $10.00 per unit and $20.00 per unit,...

Assume the prices of product L and K are $10.00 per unit and $20.00 per unit, respectively, and that Firm ABC has $1000 to spend. Assume that Firm ABC uses 10 of input L to produce its product at the optimal point

a.. Write out isocost equation for this problem

b.What combination of L, and K will Firm ABC use at the optimal point?

c. Now assume that the price of K changed from $20.00 per unit to $10 per unit, and assume the firm will still use 10 units of L to produce at the optimal point. Write out the new isocost function, and how much L and K will the firm use at the optimal point

d.Draw the isocost and isoquant graphs before the change and after the change in the price of K. Show the optimal points.

e. Write out the algebraic expression of profit maximization / cost minimization

Expert Solution

Rahul Sunny answered 2 years ago

Product A sells for $24.00 per unit and its variable cost is $20.00 per unit. Product...

Product A sells for $24.00 per unit and its variable cost is $20.00 per unit. Product B sells for $30.00 per unit and its variable cost is $22.80 per unit. Both products use the same machines. A total of 204,000 machine hours are available each year. Product A requires 1.0 machine hour (MH) while Product B requires 1.5 MHs. The market demand for Product A is 100,000 units and the market demand for Product B is 70,000 units. The company...

Ferkil Corporation manufacturers a single product that has a selling price of $20.00 per unit. Fixed...

Ferkil Corporation manufacturers a single product that has a selling price of $20.00 per unit. Fixed expenses total $63,000 per year, and the company must sell 9,000 units to break even. If the company has a target profit of $17,500, sales in units must be: Multiple Choice • 10,682 units • 9,875 units • 11,500 units • 12,150 units Item46 Time Remaining 2 hours 46 minutes 8 seconds 02:46:08 Item46 Item 46 Time Remaining 2 hours 46 minutes 8 seconds...

Assume you have only three goods to choose from: Good “A” Price is $10.00 per unit...

Assume you have only three goods to choose from: Good “A” Price is $10.00 per unit Good “B” Price is $12.00 per unit Good “C” Price is $3.00 per unit Also assume you have $76.00 of income to spend and have the following marginal utility expectations for the goods. Unit Marginal Utility Good A MU/$ Unit Marginal Utility Good B MU/$ Unit Marginal Utility Good C MU/$ 1 100 1 60 1 21 2 80 2 48 2 18 3...

Assume an atom has K, L, and M electrons and the energies for K, L, and...

Assume an atom has K, L, and M electrons and the energies for K, L, and M shells are -5000, -500, and -50 eV. Please give all possible energies of Auger electrons and characteristic X-rays.

Kerchoo! Flag Company has a per unit variable cost of $10.00 per unit, which is 60%...

Kerchoo! Flag Company has a per unit variable cost of $10.00 per unit, which is 60% of the selling price. Fixed costs are $100,000. Calculate break even in sales $ and units using the contribution margin and contribution margin approach and the contribution margin income statement table. No equation approach, that is, do not copy formulas/equations from the text and then substitute in values. There is enough of that in MyLab. Use the table. Total Amount (Contribution Margin Income Statement)...

Selling price per unit (package of 2 CDs)...................................... $20.00 Variable costs per unit: Direct material............................................................................................................... $4.00...

Selling price per unit (package of 2 CDs)...................................... $20.00 Variable costs per unit: Direct material............................................................................................................... $4.00 Direct labor...................................................................................................................... $5.00 Artist's royalties.............................................................................................................. $3.50 Manufacturing overhead.......................................................................................... $3.00 Selling expenses............................................................................................................ $1.00 Total variable costs per unit............................................................ $16.50 Annual fixed costs: Manufacturing overhead.......................................................................................... $180,000 Selling and administrative....................................................................................... $220,000 Total fixed costs................................................................................ $400,000 Forecasted annual sales volume (120,000 units)......................... $2,400,000 If the company's direct-labor costs do increase by 8%, what selling price per unit of product must it charge to maintain the same contribution margin...

1.A job was budgeted to require 6 hours of labor per unit at $10.00 per hour....

1.A job was budgeted to require 6 hours of labor per unit at $10.00 per hour. The job consisted of 6,800 units and was completed in 37,800 hours at a total labor cost of $410,400. What is the total labor cost variance? 400 unfavorable. 6800 unfavorable. 2400 unfavorable 3820 unfavorable 6220 unfavorable 2. Based on a predicted level of production and sales of 15,000 units, a company anticipates reporting operating income of $62,000 after deducting variable costs of $90,000 and...

Assume that output is given by Q(L,K)=50 K^0.5 L^0.5 with price of labour L = w...

Assume that output is given by Q(L,K)=50 K^0.5 L^0.5 with price of labour L = w and price of capital K = r 1.If capital in the short run is fixed at K what is the short-run total cost? 2.Write the values for the derivatives of the Total cost with respect to w and r. Does Shephard’s lemma hold in this case?

Selling price per unit $20.00 Variable costs per unit: Direct materials $4.00 Direct manufacturing labor $1.60...

Selling price per unit $20.00 Variable costs per unit: Direct materials $4.00 Direct manufacturing labor $1.60 Manufacturing overhead $0.40 Selling costs $2.00 Fixed costs $96,000 A. Calculate the number of units the company must sell to break even. B. Calculate net profit/net lose if the company sold 9,500 units. C. Calculate the number of units the company must sell to make a net profit of $144,000.

Assume that the prices of L and M are $6 and $2, respectively,

Answer the question on the basis of the following total utility data for products L and M. Assume that the prices of L and M are $6 and $2, respectively, and that the consumer's income is $22 Units of L Total Utility Units of M Total Utility 1 9 1 16 2 15 2 28 3 18 3 36 4 20 4 40 5 21 5 42 How many units of the two products will the rational consumer purchase?

Question