A firm produces a product in a competitive industry and has a total cost function TC = 50 + 4Q +2Q² and MC = 4 + 4Q. At the given market price of $20, the firm is producing 5 units of output. Is the firm maximizing profit ? What quantity of output should the firm produce in the long run?
In: Economics
If the price is less than the average total cost but higher than the average variable cost, then the firm is making a _________.
a. loss and is making a negative contribution to fixed
costs
b. loss but will continue to produce in the short-run
c. loss and will shut down in the short-run
d. profit
What two types of market scopes did Michael Porter use in developing his generic strategies model?
Broad and narrow.
Cost leadership and focus.
Benefit leadership and focus.
Cost leadership and benefit leadership.
Assume firm 1 but not firm 2 is contemplating making a strategic commitment. Fudenberg and Tirole call it a ________ if the tactical variables are _______ and the commitment makes firm 1 __________.
a. lean and hungry look; strategic complements; soft
b. puppy-dog ploy; strategic complements; tough
c. fat-cat effect; strategic complements; tough
d. top-dog; strategic substitutes; soft
In: Economics
Suppose you are given the following data:
Assume the following figures (all labor is paid equally):
Quantity = 34 units produced for 3 workers hired
10 units produced for 2 workers hired
1 unit produced for 1 worker hired
0 units produced for 0 workers hired
Fixed Cost = $50
Variable Cost = $40 total for 1 worker hired
From this data, what is the average total cost when two workers are hired?
In: Economics
A monopolist has total cost TC = Q2 + 10Q + 100 and marginal cost MC = 2Q + 10. It faces demand Q = 130 - P (so its marginal revenue is MR = 130 - 2Q). Its profit-maximizing price is
$50
$75
$100
In: Economics
Industry demand is given by :
P = 100-2Q
The total cost for the individual firm of which there are 4, is given by:
TCi = 10qi + qi^2
If the 4 firms form a cartel what will be the price and output if
the cartel is centralized and
the cartel is decentralized
As we know cheating is a problem with cartels what would happen to price and output if the cartel breaks down?
In: Economics
In: Accounting
Determine the effect on the cost of goods sold, total assets, and gross margin for 2013 and 2014 if the following inventory errors are not corrected. Indicate your answer with (+) for overstated, (-) for understated, and (0) for no effect.
a. Beginning inventory for 2013 is understated b. Ending inventory for 2013 is overstated
Effect in 2013 on
Cost of Goods Sold ｜Total Assets｜ Gross Margin
a.
b.
Effect in 2014 on
Cost of Goods Sold ｜Total Assets ｜Gross Margin
a.
b.
Cough FX Limited reports the following shareholders' equity as of December 31, 2013:
Preferred shares, $5.00, authorized 100,000 shares, issued 80,000 shares $4,400,000
Common shares, authorized 200,000 shares, issued 150,000 shares, 146,000 outstanding $2,190,000
Retained earnings $3,400,000
$9,990,000
Determine the following:
a. Assume the board of directors authorizes a 2-for-1 split on the common shares. Calculate the number of shares outstanding after the split and the book value of both classes of shares.
b. Assume the board of directors authorizes a 15% stock dividend on the common shares after the stock split. The current selling price of the common shares is $9. Prepare the journal entry to distribute the stock dividend.
In: Accounting
Pfeitzer is a monopolist for a new drug that makes people feel thinner. The total cost function is C(Q) = 200 + 10Q + Q 2(read as Q SQUARED or Q to the power of 2) . The inverse demand function is p(Q) = 82 − Q.
(a) What are the efficiency losses of the monopoly pricing compared to competitive prices?
(b) Pfeitzer argues that other firms should not be allowed to enter the market, since it is a natural monopoly. A potential competitor argues that it is not a natural monopoly. Show why both are right at the same time.
In: Economics
Coca is a monopolist for a new drug that makes people feel thinner. The total cost function is C(Q) = 200 + 10Q + Q 2(read as Q SQUARED or Q to the power of 2) . The inverse demand function is p(Q) = 82 − Q.
(a) What are the efficiency losses of the monopoly pricing compared to competitive prices?
(b) Coca argues that other firms should not be allowed to enter the market, since it is a natural monopoly. A potential competitor argues that it is not a natural monopoly. Show why both are right at the same time.
In: Economics
The following is total monthly budgeted cost and activity
information for the four activity centers in the billing department
of Oregon Power Company:
| Activity Center |
Variable |
Fixed |
Cost Driver |
| Statement inquiry |
$79,200 |
$156,000 |
3,200 labor hours |
| Correspondence |
$9,639 |
$22,000 |
2,700 letters |
| Account billing |
$144,000 |
$77,000 |
2,400,000 lines |
| Payment verification |
$12,095 |
$80,000 |
20,500 accounts |
In September, actual total costs and activity were as follows:
| Activity Center |
Total Costs |
Driver Amount |
| Statement inquiry |
$234,023 |
3,140 labor hours |
| Correspondence |
$31,154 |
2,550 letters |
| Account billing |
$231,898 |
2,580,000 lines |
| Payment verification |
$92,876 |
20,630 accounts |
Required
Compute the flexible-budget variances for the following two
activity cost items (round unit costs to two decimal places and
enter favorable variances as positive numbers and unfavorable
variances as negative numbers):
Correspondence :
Statement inquiry :
In: Accounting