Economic problems

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Question description

Please solve these 5 problems that are included in the file.

PROBLEMS CHAPTER 5 1. Cost Analysis. Commercial Recording, Inc. is a manufacturer and distributor of reel-to-reel recording decks for commercial recording studios. Revenue and cost relations are: TC = \$100 + \$20Q + \$15Q2+ \$10Q3 A. What is the Total Variable Cost (TVC) at Q=10? B. What is the Average Total Cost (ATC) at Q=10? C. What is the Average Variable Cost (AVC) at Q=10? D. What is the Fixed Cost (FC) at Q=10? (2points) E. What is the Marginal Cost (MC) at Q=10? 2. A firm can manufacture a product according to the production function: Q = F(K,L) = (5, 10) = 10,000units a. Calculate the average product of labor, APL, and APk, Chapter 8 1. Monopoly VS. Perfect competition market Equilibrium. Quick Tax, Inc., enjoys pricing power in the Daytona Beach market for tax preparation services. Total and marginal revenue relations for small business customers are: TR = \$280Q - \$0.005Q2 MR = TR/Q = \$280 - \$0.01Q Marginal costs are stable at \$100 per unit. All other costs have been fully amortized. A. As a monopoly, calculate Quick Tax's output, price, and profits at the profitmaximizing activity level. B. What price and profit levels would prevail based on the assumption that perfectly competitive pricing emerges in the local market? Q = 18,000 P = TR/Q = \$190 PROFIT = \$1,620,000 B. In a perfectly competitive industry, P = MR = MC in equilibrium. Thus, after the emergence of competitive market pricing, P = MC = \$100 would result. Because MC = AC, P = MC implies that  = 0. 2. Perfectly Competitive Equilibrium. Office building maintenance plans call for the stripping, waxing, and buffing of ceramic floor tiles. This work is often contracted out to office maintenance firms, and both technology and labor requirements are very basic. Supply and demand conditions in this perfectly competitive service market in St. Paul, Minnesota are: QS = -20 + 2P QD = 80 - 2P (Supply) (Demand) where Q is thousands of hours of floor reconditioning per month, and P is the price per hour. A. Algebraically determine the market equilibrium price/output combination. . ANS: A. Algebraically, QD = QS P = \$25 per hour Both demand and supply equal 30(000) because: Demand: QD = 80 - 2(\$25) = 30(000) Supply: QS = -20 + 2(\$25) = 30(000) 3. Firm Supply. Credit Check, Inc., offers credit checking services to credit card companies and retailers. The following relation exists between the number of credit checks performed and total costs in this viciously competitive market: Total Output 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Total Cost \$ 150 600 1,060 1,540 2,040 2,565 3,115 3,750 A. Construct a table showing the marginal cost of production. B. What is the minimum price necessary for the firm to supply one thousand credit checks? C. How many credit checks would the firm perform at industry prices of \$510 and \$550 per thousand? Chapter 11 Pricing 1. Use the following data to complete the following table: Price \$ Marginal cost \$ Markup on cost % \$1 \$.50 2 1.60 5 1 10 7.50 25 15 Markup on price % 2 Use the following data to complete the following table: Product Price elasticity of Optimal Markup demand on cost % A -1.5 B -2.0 C -2.5 D -5.0 E -10.0 Optimal Markup on price % 3. Optimal price Nice bikes, Inc., recently reduced their prices by offering rebates of 5% of the regular \$250 priced Xcede model bikes. Sales jumped by 15% over the previous month. a. Calculate the point price elasticity of demand for Xcede model bikes. b. If the marginal cost is \$100 what is the optimal price for Xcede bikes. c. Calculate the optimal markup on cost d. Calculate the optimal markup on price. CHAPTER 1 The total cost function for Ethan Allen solar watches is given as follows: TC = 100 + 1500Q + 15Q2 A) At what output level is total cost minimized? 4points 2. Given the output (Q) and price (P) data in the following table, calculate the related total revenue(TR), marginal revenue (MR), profit, and total cost. (20points) Quantity Price Total Total Marginal Profit Marginal Revenue 0 1 2 3 4 5 6 7 8 9 10 0 90 85 80 75 70 65 60 55 50 45 Cost 0 10 30 60 100 150 210 280 360 450 550 Revenue b. At what output level is revenue maximized? (3points) C. At what output level is profit maximized? (3points) Profit

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