As the time horizon increases, variable costs rely less on existing factors and restrictions and therefore will begin behaving differently which will in turn affect the cost of production (Wright, 2007). The second way a firm that’s into profit maximization can decide its greatest level of output is by way of the marginal revenue -- marginal cost method. This is done by subtracting the marginal cost from the marginal revenue that a product generates. Using marginal cost and marginal revenue as the bases, profit maximization will be obtained at the point when marginal revenue is equal to marginal cost. If the marginal revenue is greater than marginal cost this would be when a profit maximizing firm would need to increase production until marginal revenue is equal to marginal cost.
q1= (100-(10-3))/3=31 q2= 30 Q=31+30=61 Market Price=100-30-31=39 Firm’s one profit= 31*39-31*7=992 Firm’s two profit=30*39-30*10=870 c. Compare consumer surplus from parts a and b. Do consumers fare better with or without the subsidy? (Remember that consumer surplus is calculated from market quantity and market price.) The consumer surplus is bigger with subsidiary because they get more quantity with lower price while without subsidiary consumer’s surplus become smaller as they get less quantity with higher price. Chapter 11 6.
D. convex to the origin because of increasing opportunity costs. 20. Which of the following will shift the production possibilities curve to the right? A. an increase in the unemployment rate from 6 to 8 percent B. a decline in the efficiency with which the present labor force is allocated C. a decrease in the unemployment rate from 8 to 6 percent D. a technological advance that allows farmers to produce more output from given
(0.5 points) Simple interest is gained only on the principal amount of an account. What is compound interest? (0.5 points) Compound interest is interest that is added to the principal in the account, so that the interest you receive starts to generate its own interest. What is the time value of money? (0.5 points) The time value of money is the assumption that money is worth more the sooner it is received.
Shareholders may prefer a lower current ratio so that more of the firm's assets are working to grow the business. IT IS Indicator of short-term debt-paying ability. \ Quick Ratio | = | Current Assets - Inventory | | Current Liabilities | |
et powerECO204: Homework Assignment 3 1. True, False, Uncertain a. A firm that enjoys economic rents earns higher economic profits than other firms without the economic rents. b. Relative to the perfectly competitive equilibrium, the equilibrium outcome for a market dominated by a monopsonist will be higher prices and lower levels of good demanded.
Net income ratios benefit from improved gross profit calculations but also include increased interest and depreciation expense from the new loan and equipment, lowering net income. Efficiencies brought by reduced energy consumption have an offsetting effect, increasing net
Explain your answers. a. If a firm in the industry wishes to increase total sales revenue (ignoring cost considerations), will it raise or lower its selling price? Why? The selling price would only increase because the absolute value of -2.5 is 2.5 which are greater than 1 meaning it is elastic and an increase in price leads to a reduction in total revenue.
d) The equilibrium interest rate increases to bring desired investment into equilibrium with the reduced quantity of national saving. e) The equilibrium quantity of investment is reduced via the increase in the interest rate by an amount equal to the increase in government spending. Question 5 (15 marks) a) capital is added. No, MPK does not diminish because it does not decline as more is also acceptable. b) L = 100: L = 110: L = 120: 0. .
If the interest rate is low, it will cause more funds to be available, greater expansion and increased employment. If the interest rate is high, it will cause fewer funds to be available, less expansion, and decreased employment. Fiscal policy is an important tool for managing the economy because of its ability to affect the total amount of output produced or the gross domestic product. The first impact of a fiscal expansion is to raise the demand for goods and services. This greater demand leads to increases in both output and prices.