Shower Power, Inc., a firm in monopolistic competition, produces shower radios. The company's economists know that it can sell no radios at $80, and for each $10 cut in price, the quantity of radios it can sell increases by 50 a day. This relationship continues to hold until the price falls to $20. The firm's total fixed cost is $3,000 a day. Its marginal cost is constant at $20 per radio.
a)Draw the demand curve faced by the firm and indicate shower power's marginal cost, its marginal revenue curve and average total cost curves.
In: Economics
| Quantity (Q) | Total Cost (TC) | Average Total Cost (ATC) | Marginal Cost (MC) |
| 0 | $9 | -- | -- |
| 1 | $10 | ||
| 2 | $12 | ||
| 3 | $15 | ||
| 4 | $19 | ||
| 5 | $24 | ||
| 6 | $30 | ||
| 7 | $49 |
The table above shows a perfectly competitive firm's widget production and cost schedule. Suppose that the prevailing market price is $6.
(a) Fill in the blanks of the table above.
(b) Find the profit-maximizing quantity using the condition MR = MC.
(c) Calculate the maximum profit using the following formula: Profit =(P − ATC)×Q
In: Economics
8) For a perfectly competitive firm, marginal revenue is
A) equal to the price.
B) less than the price.
C) undefined because the firm's demand curve is horizontal.
D) greater than the price.
and
10) A perfectly competitive firm will maximize profit when the quantity produced is such that the
A) firm's marginal revenue is equal to its marginal cost.
B) price exceeds the firm's marginal cost by as much as possible.
C) firm's marginal revenue exceeds its marginal cost by the maximum amount possible.
D) firm's total revenue is equal to total cost.
In: Economics
There is not a case study involved with this question. This is my second attempt to have this question answered.
This question is in reference to the healthcare industry.
Briefly describe what happens to each of the following as volume increases. Assume all values stay within their relevant range. Total fixed cost? Total variable cost? Fixed cost per unit? Variable cost per unit? Explain the relationship between step-fixed costs and the relevant range. References would be a bonus! This question is found on page 448 in Financial Management of Heath Care Organizations (Zelman, et al., 2014).
In: Finance
The controller of Dousmann Industries has collected the following monthly expense data for use in analysing the cost behavior of maintenance cost.
Month Total Maintenance costs Total Machine Hours
January 2,750 3,500
February 3,000 4,000
March 3,600 6,000
April 4,500 7,900
May 3,200 5,000
June 5,000 8,000
A) Determine the fixed and variable cost components using the high low method.
B) Prepare a graph showing the behavior of maintenance costs, and identify the fixed and variable elements. Use 2,000- hour increments and 1,000 cost increments.
In: Accounting
BMB Inc. purchased two pumps for use at its nanofiltration water conditioning plant. The cost of the pumps was $950 each. If the chemical cost is $11 per day, assuming 30 days per month (i.e. 360 days a year) and a 3-year pump life,
In: Economics
Consider the new Starbucks in Bethlehem. Suppose the wage is w = $9, and the cost of capital is r = $1, and their production function for cups of coffee is q = 4K0.5L0.5
a) What is the least/minimum cost of inputs combination required to produce 120 cups of coffee?
b) What would be the total cost of producing 120 cups of coffee?
c) Suppose instead that capital was fixed at 25 units. What would be the implications for labor usage maintaining q = 120?
d) Keeping capital fixed at 25 units. What would be the implications for total cost maintaining q = 120?
In: Economics
The table below has the costs for a specific period:
| Cost item | Amount |
| Direct labour | $90,000 |
| Direct material | $80,000 |
| Advertising | $40,000 |
| Factory supervision | $50,000 |
| Sales Commission | $60,000 |
| Depreciation, administrative office equipment | $5,000 |
| indirect materials, factory | $7,000 |
| Depreciation, factory building | $10,000 |
| Administrative, office supplies | $3,000 |
Required:
Please solve 4, 5, 6, 7
In: Accounting
Suppose that a firm faces the demand curve, P = 100 - 3Q, where P denotes price in dollars and Q denotes total unit sales. The cost equation is TC = 200 + 22Q.
a. Determine the firm’s profit-maximizing output and price.
b. Suppose that there is a change in the production process so that the cost equation becomes TC = 80 + 12Q + Q2. Determine the resulting effect on the firm’s output:
c. Using the two different cost structures from part a and b, compute Total Cost and Marginal Cost at the quantity value of 12.
Cost structure a: TC =
MC =
Cost structure b: TC =
MC =
d. Do the values computed in part c support the difference you found in the quantity values (compared output in part a and part b)?
e. Suppose that the firm sells in a competitive market and faces the fixed price: P = $56. State the Total Revenue (TR) functions, and using the cost function in part b, find the firm’s new profit maximizing (optimal) quantity.
Please provide step by step ( i am trying to figure out how to do it)
In: Economics
Rosehut Olive Oil Company makes two grades of olive oil: standard and extra virgin. Rosehut has identified two activity cost pools, the related costs per pool, the cost driver for each pool, and the expected usage for each pool.
| Activity | Total Activity Cost | Cost Driver | Standard | Extra Virgin | |||||||||||||||||
| Washing, Pressing & Filtering (WPF) | $ | 1,673,150 | Washing, Pressing, and Filtering hours | 46,400 | hours | 107,100 | hours | ||||||||||||||
| Bottling | $ | 706,500 | Number of bottles | 314,000 | bottles | 78,500 | bottles | ||||||||||||||
Additional information about each grade of olive oil is as follows:
| Grade | Sales Revenue | Direct Materials Costs | Direct Labor Costs | ||||||||
| Standard | $ | 5,135,000 | $ | 900,000 | $ | 375,000 | |||||
| Extra Virgin | $ | 2,450,000 | $ | 600,000 | $ | 150,000 | |||||
Required:
1. Calculate the activity rate for each cost pool.
2. Using the activity rates, determine the total amount of overhead assigned to each product.
3. Determine total manufacturing cost for each product.
4. Calculate the gross profit for each product.
In: Accounting