Monopolistic firm has the inverse demand function p = 250 – 6Q. It’s total cost of production is C = 1250 + 10Q + 8Q² :

1. Create a spreadsheet for Q = 1 to Q = 20 in increments of 1. Determine the profit-maximizing output and price for the firm and the consequent level of profit.

2. Will the firm continue the production at the profit-maximizing level of output? Show why or why not?

3. Calculate the Lerner Index of monopoly power for each output level and verify its relationship with the value of the price elasticity of demand at the profit-maximizing level of output.

4. Suppose that a specific tax of 10 per unit is imposed on the monopoly. What is the effect on the monopoly’s profit-maximizing price?

Consider the natural log transformation (“ln” transformation) of variables labour cost (L_COST), and total number of rooms per hotel (Total_Rooms). 4.1 Use the least squares method to estimate the regression coefficients b0 and b1 for the log-linear model 4.2 State the regression equation 4.3 Give the interpretation of the regression coefficient b1. 4.4 Give an interpretation of the coefficient of determination R2. Also, test the significance of your model using the F-test. How, does the value of the coefficient of determination affect the outcome of the above test? Test whether a 1% increase of the total number of rooms per hotel can increase the labour cost by more than 0.20%? Use the 5% level of significance for this test.

1. Why is the average total cost curve U-shaped?

    * Specifically, why's it downward sloping at first?

    * Then why is the curve upward sloping at some point?

2. What are the similarities & differences between Diminishing Marginal Returns and Diseconomies of Scale?   

A. Discuss when each occurs.   

B. Discuss what causes each of them.

3. Read another student’s response to these questions and state if you agree or disagree with their answer. Explain why you think it’s correct or not correct.

At the beginning of the year, Learer Company’s manager estimated total direct labor cost assuming 45 persons working an average of 2,500 hours each at an average wage rate of $20 per hour. The manager also estimated the following manufacturing overhead costs for the year.

At year-end, records show the company incurred $1,574,000 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $615,000; Job 202, $574,000; Job 203, $309,000; Job 204, $727,000; and Job 205, $325,000. In addition, Job 206 is in process at the end of the year and had been charged $28,000 for direct labor. No jobs were in process at the beginning of the year. The company’s predetermined overhead rate is based on direct labor cost.

Required
1-a. Determine the predetermined overhead rate for the year.
1-b. Determine the total overhead cost applied to each of the six jobs during the year.
1-c. Determine the over- or underapplied overhead at the year-end.
2. Assuming that any over- or underapplied overhead is not material, prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold at the end of the year.

In a Stackelberg duopoly, each firm has the total cost function C=40q_i, where q_i is the quantity supplied by an individual firm (i=1,2). The total market demand is given by Q = 100 - 0.5p. Firm 1 is the leader and Firm 2 is the follower.

What is the Nash-Stackelberg output level for each? What is the Nash-Stackelberg market price and quantity? What is each firm's profit?

Consider the natural log transformation (“ln” transformation) of variables labour cost (L_COST), and total number of rooms per hotel (Total_Rooms). 4.1 Use the least squares method to estimate the regression coefficients b0 and b1 for the log-linear model 4.2 State the regression equation 4.3 Give the interpretation of the regression coefficient b1. 4.4 Give an interpretation of the coefficient of determination R2. Also, test the significance of your model using the F-test. How, does the value of the coefficient of determination affect the outcome of the above test?Test whether a 1% increase of the total number of rooms per hotel can increase the labour cost by more than 0.20%? Use the 5% level of significance for this test.

Why is the long-run average total cost (LRATC) curve called the planning curve? Illustrate.

Change the total Direct Material cost to be $128,000. Additional Information: Assume the sales price per unit is $15.50. Assume variable selling expenses are $1.10 per unit sold. Assume fixed selling and administrative expenses total $154,000. Prepare an Absorption-Costing Income Statement down to Operating Income Then prepare a Variable-Costing Income Statement in proper format down to Operating Income. Note this exercise involves a situation where more units were made than sold.

Lane company produced 50,000 units during its first year of operations and sold 47,300 at $12 per unit. The company chose practical activity- at 50,000 units- to compute its predetermined over head rate. Manufacturing costs as follows.

Direct Materials: 123,000

Direct Labor: $93,000

Variable overhead: $65,000

Fixed Overhead: $51,000

Consider an industry comprising two firms producing a homogeneous product. The market demand and total cost equations are: P=200-2(Q_1+Q_2 ); 〖TC〗_i=4Q_i, where i = 1, 2.

a. What is each firm’s reaction function?

b. What are the market-clearing price, and output and profit of each firm?