I NEED DETAILED EXPLANATIONS WITH FOR THE FOLLOWING QUESTIONS. ANSWERS ARE GIVEN
ID: 1195256 • Letter: I
Question
I NEED DETAILED EXPLANATIONS WITH FOR THE FOLLOWING QUESTIONS. ANSWERS ARE GIVEN. BEST ANSWER WILL BE POSITIVELY RATED.
Q) competitive firm sells its product at a price of $0.10 per unit.
Its total and marginal cost functions are:
TC = 5 - 0.5Q + 0.001Q^2
where TC is total cost ($) and Q is output rate (units per time period).
a. Determine the output rate that maximizes profit or minimizes losses in the short-term.
b. If input prices increase and cause the cost functions to become
TC = 5 - 0.10Q + 0.002Q^2
what will the new equilibrium output rate be?
A) Answer section a Q=75 and to section b is Q=50
B) Answer section a Q=55 and to section b is Q=10
C) Answer section a Q=95 and to section b is Q=40
D) Answer section a Q=15 and to section b is Q=100
Answer: A
28. Bud Owen operates Bud's Package Store in a small college town. Bud sells six packs of beer for off-premises consumption. Bud has very limited store space and has decided to limit his product line to one brand of beer, choosing to forego the snack food lines that normally accompany his business. Bud's is the only beer retailer physically located within the town limits. He faces considerable competition, however, from sellers located outside of town. Bud regards the market as highly competitive and considers the current $2.50 per six pack selling price to be beyond his control. Bud's total and marginal cost functions are:
TC = 2000 + 0.0005Q‚
MC = 0.001Q,
where Q refers to six packs per week. Included in the fixed cost figure is a $750 per week salary for Bud, which he considers to be his opportunity cost.Calculate the profit maximizing output for Bud. What is his profit?
A) Q=2500, =1,125
B) Q=12500,=210,125
C) Q=500, =95,225
D) Q=5250, =95,225
Answer:A
A production process using two inputs, labor and capital, can be written as:
Q = 5LK;
where Q represents output per day (tons). The unit costs of inputs are $150 for labor (L) and $1,000 for capital (K). Determine the least cost combination of L and K if the firm decides to produce 1,000 tons per day. What is the total cost required for 1000 tons per day?
A) Optimum L= 36.51, K=5.48, total cost $10,965.50
B)Optimum L= 55.25, K=19.55, total cost $20,450
C) Optimum L=15, K=25, total cost $100,000
D) Optimum L= 45.5, K=5.5, total cost $15,550
Answer: C
A firm operating in a competitive market with the following total cost function: TC=50+60q+2q^2
The market price of the product is $100. If the government imposes a $10 tax per unit of output on the firm, the level of output and profit of the firm changes as following:
A) Output increases from 10 to 12.5 and profit rises from $150 to 225.50
B) Output increases from 100 to 125 and profit rises from $1150 to 1225.50
C) Output decreases from 10 to 7.5 and profit decreases from $150 to 62.50
D) Output increases from 10 to 75 and profit decreases from $1250 to 225.50
Answer: C
Explanation / Answer
Hello Faizan, I've no idea what your comment means. Your answers below:
Question - 1
P = 0.10, TC = 5 - 0.5Q + 0.001Q2
(a) A competitive firm maximizes profits by equating its price with marginal cost (MC).
MC = dTC / dQ = - 0.5 + 0.002Q
Equating with P:
- 0.5 + 0.002Q = 0.10
0.002Q = 0.1 + 0.5 = 0.6
Q = 0.6 / 0.002 = 300
(b)
TC = 5 - 0.10Q + 0.002Q2
MC = dTC / dQ = - 0.1 + 0.004Q
Equating with price,
- 0.1 + 0.004Q = 0.10
0.004Q = 0.1 + 0.1 = 0.2
Q = 0.2 / 0.004 = 500
NOTE: Answer mismatch with options you provided. Either cross-check your answers, or cross-check your price & TC data.
Question - 28
Since pricing is beyond control, the seller is a price-taker, signifying that the market is perfectly competitive where profit is maximized by equating price with MC.
Or,
0.001Q = 2.5
Q = 2.5 / 0.001 = 2,500
So, TC = 2000 + 0.0005Q = 2000 + (0.0005 x 2500) = 2000 + 1.25 = 2001.25
Total revenue, TR = P x Q = 2.5 x 2,500 = 6250
Profit = TR - TC = 6250 - 2001.25 = 4248.75
NOTE: Again answer mismatch. I strongly suggest you check all the data you have, especially the number of Zeros & decimal points!
Tutor Remarks: Out of total 4 questions, the first 2 are answered. For both these questions, there is mismatch between answer obtained from calculations, and answer options provided by student. The student has been advised to cross-check his data.
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