5. There are three oligopolists who compete on quantity. Firm 1 has cost function c1(q1) = 100 + 10q1. Firm 2 has cost function c2(q2) = 100 + 15q2. And firm 3 has cost function c3(q3) = 100 + 20q3. These cost functions apply to each period. The market demand function is 100-p.

   a. In the first period, all firms compete. Find the equilibrium price and consumer surplus, as well as the profit of each firm, and the total surplus.
   b. In the second period, firm 1 has bought out Firm 3. It ceases production in Firm 3’s plant, so there are no longer any fixed costs associated with Firm 3.Find the equilibrium price and consumer surplus, as well as the profit of each firm, and the total surplus.
   c. Should this merger be allowed? Explain briefly (100 words or less)

Direct Materials Variances

Silicone Engine Inc. produces wrist-worn tablet computers. The company uses Thin Film Crystal (TFC) LCD displays for its products. Each tablet uses one display. The company produced 450 tablets during December. However, due to LCD defects, the company actually used 500 LCD displays during December. Each display has a standard cost of $6.40. LCD displays were purchased for December production at a cost of $3,150.

Determine the price variance, quantity variance, and total direct materials cost variance for December. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. And, enter your final variance amounts to the nearest whole dollar.

Flexible Budget for Fabrication Department

Steelcase Inc. is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it produces filing cabinets in two departments: Fabrication and Assembly. Assume the following information for the Assembly Department:

Prepare a flexible budget for 8,000, 10,000, and 12,000 filing cabinets for the month of August, similar to Exhibit 5, assuming that inventories are not significant. Enter all amounts as positive numbers.

3 Price Discrimination ( Show all work)

Suppose the demand for ticket sales is given by the following function:

P = 315 − 2Q

Further suppose that marginal cost is 3Q and total cost is 3/2Qsquare2

a) Find the profit maximizing price and quantity.

b) What is the maximum profit? Suppose now that the ticket seller can price discriminate by checking IDs. There are two demands in the market:

Adult Demand: PA = 315 − 3Q

Student Demand: PK = 315 − 6Q

Again, suppose that marginal cost is 3Q and total cost is 3/2Q square2

c) What is the profit maximizing price (PA) that will be charged to the adults?

d) What is the profit maximizing price (PK) that will be charged to the kids?

e) What is the maximum profit achieved by profit discrimination (add the profits from selling to the adult and kid markets)?

Olga is the proprietor of a small business. In 2019, the business's income, before consideration of any cost recovery or § 179 deduction, is $250,000.

Olga spends $620,000 on new 7-year class assets and elects to take the § 179 deduction on them. She does not claim any available additional first-year depreciation. Olga's cost recovery deduction for 2019, except for the cost recovery with respect to the new 7-year assets, is $95,000.

a. What is the tentative amount of Olga's overall § 179 deduction for the seven-year class assets before any income limitation?

b. What is the total amount of Olga's § 179 deduction for the seven-year class assets after any income limitation?

c. What is Olga's total cost recovery depreciation deduction (including any § 179 deduction)?

d. What is the amount of any § 179 carryforward?

Make or Buy Terry Inc. manufactures machine parts for aircraft engines. CEO Bucky Walters is considering an offer from a subcontractor to provide 3,000 units of product OP89 for $165,000. If Terry does not purchase these parts from the subcontractor, it must continue to produce them in-house with these costs:

Costs per Unit

Direct materials $26

Direct labor $17

$Variable overhead $15

Allocated fixed overhead $4

Required: Calculate the relevant cost for producing the product. Relevant Cost Per Unit Total $0

Direct materials $

Direct labor $

Variable overhead $

Allocated fixed overhead $

Total

Calculate the additional cost or savings of producing the product internally versus purchasing the product externally, from a supplier..

A jeweler is considering producing a limited edition diamond bracelet, and she is trying to decide how many bracelets to produce. The table gives her estimated total cost for various production levels as well as the price she would charge for each bracelet. Number of bracelets Total cost (thousands) Price per bracelet 100 $215 $8100 200 $420 $7500 300 $625 $6100 400 $820 $5100 500 $1015 $4200 600 $1205 $3600 (a) Of the production levels listed in the table, which gives the highest profit? (b) Estimate the marginal cost and marginal revenue when 400 bracelets are made. marginal cost $ marginal revenue $ (c) According to the estimates in part (b), will increasing the production level higher than 400 bracelets increase profit? Yes, increasing production will increase profit. No, increasing production will not increase profit.

Rocky Mountain Tire Center sells 13 comma 000 go-cart tires per year. The ordering cost for each order is $35 , and the holding cost is 40 % of the purchase price of the tires per year. The purchase price is $22 per tire if fewer than 200 tires are ordered, $18 per tire if 200 or more, but fewer than 5 comma 000 , tires are ordered, and $16 per tire if 5 comma 000 or more tires are ordered. a) How many tires should Rocky Mountain order each time it places an order? Rocky Mountain's optimal order quantity is_______ units (enter your response as a whole number). b) What is the total cost of this policy? Total annual cost of ordering optimal order sizeequals $ _____(round your response to the nearest whole number).