4) Consider total cost and total revenue given in the following table:

Quantity 0 1 2 3 4 5 6 7 7

Total Cost $120 150 160 170 190 230 300 410 610

Total Revenue $0 70 140 210 280 350 420 490 560

A. Create a table that includes the fixed cost at each level of output as well as the variable cost

at each level of output. If capital is fixed and the firm uses 10 units of capital, then what is

the price of capital? If labor is variable and the firm uses 5 units of labor to produce 3 units

of output, then what is the price of labor?

B. Create a table that includes the marginal cost, average variable cost, and average total cost

associated with each level of production. Graph these three cost measures on a single graph

with quantity on the horizontal axis. Explain how you know the firm exhibits the law of

diminishing returns.

C. Calculate profit (revenue minus costs) for each quantity. Calculate marginal revenue for

each quantity. Verify that the profit maximizing firm will choose the highest level of profit

at a point where MR = MC.

D. This firm is in a perfectly competitive industry? Explain how we know this is true. What

do you expect to happen in the long run in this industry? Will firms enter or leave the

market in the long run? Will the market price increase or decrease in the long run?

Use the table to answer the following questions

a) What is the price of the product? b) What is the marginal revenue from the fourth unit output? c) What is the profit, when firm produce 5 units?

Suppose that a price-setting firm has the following total revenue and total cost functions:

R(q) = 10.75q – 0.1875q2 and C(q) = 75 + 0.07q + 0.035q2 .

This firm faces downward sloping demand and marginal revenue curves. Marginal revenue and marginal cost are given by

?? ??
= ??(?) = 10.75 – 0.375? and    ?? ??
= ??(?) = 0.07 + 0.07?,

respectively.

a. Using the marginal revenue function given above, find an expression for the firm’s demand curve
as a function of q. I.e., D(q) = p = ??? b. What is the firm’s profit maximizing output level? I.e., ??? ??? ?: ?(?) = ?(?) −?(?).
c. Since the firm is a price setter, rather than a price taker, what price will it need to set in order to
achieve the profit maximizing output level from b. above?
d. Using the answers you found in b. and c. above, what is the firm’s total revenue? e. Using the results you found above, find the firm’s inverse demand function. I.e., D-1(p) = q = ???
f. Using the results you found from b., c., and e. above, what is the price elasticity of demand (i.e., ε
= ? ?
∙ ?? ?? ) at the firm’s profit maximizing output level? Is the profit maximizing output level in the
elastic range or is it the inelastic range of the firm’s demand curve? In which of the two ranges
should we expect a price setter to operate?
g. Use the open source “Graph” software (version 4.4.2 downloadable at http://www.padowan.dk/)
to plot the total revenue function, the cost function and the profit (π = TR – TC) function. Print
copies of your graphs and attach them to this quiz or email them to [email protected]. If you
prefer some other graphing software, such as https://www.desmos.com/calculator, use it rather
than Graph.

Total sales $120,000

Food & Beverage $24,000

Total expenses $84,000

Cost of Food and Beverage based on total sale (total sale * percentage = cost of food and beverage)

What percentage of Cost of Food and Beverage is needed to increase the Battle of the Chefs event's net profit by 10%?

(Hint: Create a formula to calculate the 10% increase, then use Goal Seek.)

Complete the following cost and revenue schedule.

a. At what rate of output are profits maximized within this range?

b. What are total profits at that output rate?

4.

Profits and losses are determined by___________

adding total cost to total revenue

subtracting implicit costs from total revenue

subtracting total costs from total revenue

subtracting explicit costs from total revenue

5.

As a waiter you earn $60,000 per year, including tips. Someone offers you a new job as an economic consultant, which pays $100,000 per year. In order to be a consultant, you’ll need to rent an office and purchase supplies and new computer equipment. We can conclude which of the following?

If the explicit cost for the consulting job is $20,000 per year, your accounting profit is equal to $20,000.

If the explicit cost for the consulting job is $20,000 per year, your economic profit is equal to $80,000.

If the explicit cost for the consulting job is $30,000 per year, your accounting profit is equal to $10,000.

If the explicit cost for the consulting job is $25,000 per year, your economic profit is equal to $15,000.

6.

The cookie company in the mall hires workers to produce cookies. The workers are paid $75 per day, and the cost of renting the space in the mall is $250 per day.

If two workers are hired, the total variable costs are_____

$400

$200

$75

$150

7.

Billy Bob runs a seafood restaurant. Last year he earned $50,000 in revenue. He had explicit costs of $20,000. Billy Bob could have made $30,000 working for the county and could have received an additional $20,000 if he rented out his building and equipment. Calculate Billy Bob’s economic profit.

$20,000

-$20,000

$0

$30,000

8.

A pizza business has the cost structure described below. The firm’s fixed costs are $20 per day.

What are the firm’s marginal costs (MC) at an output of 35 pizzas?

$4.00

$0.57

$230.00

$9.20

9.

Billy Bob runs a seafood restaurant. Last year he earned $50,000 in revenue. He had explicit costs of $20,000. Billy Bob could have made $30,000 working for the county and could have received an additional $20,000 if he rented out his building and equipment. Calculate Billy Bob’s accounting profit and implicit costs are __________

$20,000 and $30,000, respectively.

$0, and $70,000, respectively.

$50,000 and $20,000, respectively.

$30,000, and $50,000, respectively.

10.

A pizza business has the cost structure described below. The firm’s fixed costs are $20 per day.

What are the firm’s average variable costs (AVC) at an output of 25 pizzas?

$0.80

$195

$7.80

$7.00

Complete Table 1 by computing the Total Revenue, Marginal Revenue, Total Cost, and Profit columns, each rounded to two decimal places. The cost of duplicating a video on a DVD and mailing the DVD, the Marginal Cost, is $5.56. (1 point)

The President wants the GSTCG to provide videos to generate the most possible donations (Total Revenue). What price is the President of the GSTCG favoring and how many people will receive the DVD if this becomes the price of the suggested donation? Explain your answers. (1 point)

c. The Education Outreach Committee wants the GSTCG to provide videos to the most possible number of people. What price is the Educational Outreach Committee favoring and how many people will receive the DVD if this becomes the price of the suggested donation? Explain your answers. (1 point)

d. The Treasurer of the GSTCG wants the DVD program to be as efficient as possible so that the marginal revenue equals marginal cost. What price is the Treasurer favoring and how many people will receive the DVD if this becomes the price of the suggested donation? Explain your answers. (1 point)

e. The Fundraising Committee wants the DVD program to generate as much profit in donations as possible. What price is the Fundraising Committee favoring and how many people will receive the DVD if this becomes the price of the suggested donation? Explain your answers. (1 point)

First Saudi cinema in 35 years to open on April 18 AMC plans to open its first new movie theater in the Saudi capital of Riyadh on April 18 Some 350 cinemas with more than 2,500 screens will be opened by 2030. The Saudi Ministry of Culture and Information has signed an agreement with AMC to open around 40 cinemas in 15 cities in Saudi Arabia over the next five years. The license, the first of its kind, will allow one of the world’s largest film companies, to operate cinemas in the Kingdom. Under the license, AMC plans to open its first new movie theater in the Saudi capital of Riyadh in April 18. The company signed a memorandum of understanding with the Public Investment Fund in November 2017 to discuss potential trade cooperation opportunities. Saudi Arabia, with a population of 32 million, mostly under the age of 30, is expected to be the region’s largest market for movie theaters. Last December, the Ministry of Culture and Information announced that commercial cinemas would be allowed to operate in the Kingdom starting from 2018, for the first time in more than 35 years. Dr. Awad bin Saleh Al-Awad, Minister of Culture and Information, said that granting the first license provides important investment opportunities for the cinema industry. He pointed out that the Saudi market is large and most of the population is under the age of 30, so they are eager to watch their favorite films in their country. He added that the goal of the Kingdom’s Vision 2030 is to improve the quality of life by providing additional leisure opportunities. He pointed out that the opening of cinemas will help support the local economy and contribute to the creation of new jobs. The cinemas will not require men and women to sit separately, a source told Reuters on Wednesday. Vision 2030 has set a target of raising Saudi Arabia’s annual spending on cultural and recreational activities from 2.9% of total Saudi household spending to 6% by 2030. Adam Aron, CEO of AMC, said the company is following with great admiration the creative movement of development projects in the Kingdom to open new economic sectors. “We are looking forward to providing entertainment services that will enable everyone to spend an enjoyable time playing world-class film shows across the Kingdom. AMC’s entry into the Saudi Arabian market comes in partnership with the Public Investment Fund (PIF) through its wholly-owned Leisure Development and Investment Company. The move to allow movie theaters to open up a local market with annual ticket sales of up to $1bn is what makes other leading movie chains keen to enter as the largest market in the Gulf region. AMC Theaters is an American movie theater chain owned and operated by Wanda Group. Founded in 1920, AMC has the largest share of the American theater market ahead of Regal Entertainment Group and Cinemark Theaters.

Conduct SWOT and PESTLE (Political, Economic, Social, Technological, Legal, Environmental) Analysis for the Cinema Industry.

Discuss the challenges of Saudi Entrepreneurs to enter Cinema Industry in KSA

You are tasked with estimating the cost of capital for a firm. The risk-free rate is 3.2%, the expected rate of return on the market is 17.9%. Now, another similar company (similar unlevered cost of capital) has a debt-to-equity ratio of 1 to 5. It has a debt beta near zero and an equity market-beta of 1.1. Your own firm has more debt, for a debt-to-equity ratio of 1 to 1, with a debt beta of 0.5. What is a good estimate for your equity cost of capital?