...ECON 600 Lecture 3: Profit Maximization I. The Concept of Profit Maximization Profit is defined as total revenue minus total cost. Π = TR – TC (We use Π to stand for profit because we use P for something else: price.) Total revenue simply means the total amount of money that the firm receives from sales of its product or other sources. Total cost means the cost of all factors of production. But – and this is crucial – we have to think in terms of opportunity cost, not just explicit monetary payments. If the owner of the business also works there, we must include the value of his time. If the firm owns machines or land, we must include the payments those factors could have earned if the firm had chosen to rent them out instead of using them. If only explicit monetary costs are considered, we get accounting profit. But to find economic profit, we need to take into account the opportunity cost, implicit or explicit of all resources employed. The main constraints faced by the firm are: • • • II. technology, as summarized in the cost curves of the last lecture; the prices of factors of production, also taken into account by the cost curves; and the demand for its product. Demand Curve Facing the Firm The firm’s demand curve tells how much consumers will buy at each price from a particular firm. (This is distinguished from other kinds of demand curve, such as the market demand curve, which shows how much consumers will buy at each price from all firms put together.) The shape...
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...Impressive experimental exertion is being applied in the quest for gravitational waves, the conviction being that their identification could essentially help the examining of the universe. Be that as it may, starting yet, they have been distinguished just indirectly[1]. The expectation of the presence of gravitational waves comes as an immediate outcome of Einstein's hypothesis of general relativity[1], and measuring such waves stays one the last tests of his theory[2]. As per general relativity, gravity can be communicated as a space-time curvature[1], with gravitational waves being "swells" in these four measurements which spread as waves[2]. Not at all like electromagnetic waves, gravitational waves can go through matter without being impeded[3]. For example, the electromagnetic radiation discharged from supernovae blasts will be scattered endless times thus data from the blast will be lost[4]. The same does not remain constant for gravitational waves, which gives them specific criticalness in space science. Pretty much as cosmologists use optical telescopes to watch galactic wonders today, the trust is that the same will be made conceivable utilizing hardware that can distinguish gravitational waves[1]. About all galactic wonders radiate gravitational waves in some form[4], including frameworks, for example, dark opening communications, which have no electromagnetic signature[5]. In this manner, new wonders might get to be discernible if the force of gravitational...
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...Econ 101: Intro to Microeconomics Spring 2012, Handout 8 Solutions More on Monopolies 1. A monopoly faces a market demand curve given by P = 42 − Q. Its marginal cost curve is given by M C = Q. (a) Find an equation for the marginal revenue curve. Graph market demand, marginal revenue, and marginal cost for this monopoly. Double the slope of the demand curve to get the MR: M R = 42 − 2Q. The graph should show a line twice as steep as the original demand curve, but with the same price intercept. Note: the “double the slope” rule only works when the equation is solved for P! (b) Find the profit-maximizing level of production for this monopolist. M R = M C to get 42 − 2Q = Q ⇒ Q = 14. (c) What price will the monopolist charge? Plug the Q from part (b) into the demand curve: P = 42 − 14 = $28. (d) Is marginal revenue equal to price? Why or why not? Marginal revenue is less than price because the price effect (an increase in price per unit tends to increase total revenue) and the quantity effect (an increase in the price per unit tends to decrease the quantity sold, which lowers total revenue) move in opposite directions. (e) What price would be socially optimal? 1 Econ 101: Intro to Microeconomics Spring 2012, Handout 8 Solutions Socially optimal price where M C = P ⇒ Q = 42 − Q ⇒ Q = 21 ⇒ P = 42 − 21 = $21. (f) What is the monopolist’s total revenue? T R = P ∗ Q = 28 ∗ 14 = 392 2. Suppose a local utility company has a demand curve given by P = 120 − 4Q. TC for...
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...Econ 1 Assignment 4 1-) (Categories of Price Elasticity of Demand) For each of the following absolute values of price elasticity of demand, indicate whether demand is elastic, inelastic, perfectly elastic, perfectly inelastic, or unit elastic. In addition, determine what would happen to total revenue if a firm raised its price in each elasticity range identified. a) ED = 2.5:elastic b) ED = 0.8:inelastic 2-) (Price Elasticity of Supply) Calculate the price elasticity of supply for each of the following combinations of price and quantity supplied. In each case, determine whether supply is elastic, inelastic, perfectly elastic, perfectly inelastic, or unit elastic in each case. Please give details to your numeric answers. a) Price falls from $2.25 to $1.75; quantity supplied falls from 600 units to 400 units. 200/600= 1/3=33.3/22.2=.667 b) Price falls from $2.25 to $1.75; quantity supplied falls from 600 units to 500 units. 100/600=.1667 / 2.25/1.75=.757 3-) Consider the following pairs of goods. Which would you expect to have the more elastic demand? Why? a) water or diamonds=water b) insulin or nasal decongestant spray=insulin c) food in general or breakfast cereal=food d) gasoline over the course of a week or gasoline over the course of a year = week 4-) Outsourcing Inpatient Care to India The Wall Street Journal, Monday April 26, 2004. Global health care has arrived. During 2003, Canadian resident Terry Salo flew to India to have his...
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...Econ 100 Ch 1 & 2 Quiz marks = 35 STUDENT #________________________ Do not write name – ONLY Student # Multiple Choice Questions 1. Tammie makes $150 a day as a bank clerk. She takes off two days of work without pay to fly to another city to attend the concert of her favourite music group. The cost of transportation for the trip is $250. The cost of the concert ticket is $50. The opportunity cost of Tammie's trip to the concert is: A) $300. B) $450. C) $500. D) $600. 2. When a provincial government chooses to build more roads, the required resources are no longer available for spending on public education. This dilemma illustrates the concept of: A) marginal analysis. B) full employment. C) full production. D) opportunity cost. 3. When economists describe "a market," they mean: A) a place where stocks and bonds are traded. B) information networks that allow individuals to keep in touch with each other. C) a hypothetical place where the production of goods and services takes place. D) a mechanism which coordinates actions of consumers and producers to establish equilibrium prices and quantities. 4. The study of economics is primarily concerned with: A) keeping private businesses from losing money. B) demonstrating that capitalistic economies are superior to socialistic economies. C) choices which are made in seeking to use scarce resources efficiently. D) determining the most equitable distribution of society's output. 5. Economics may best...
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...Fall-14 Econ-2 Sec. #0720 Homework Assignment - 2 Interest Rate and Monetary Policy LAHC Student Name (print): Assume that the following data characterize the hypothetical economy of Greatcy: money supply = $210 billion; quantity of money demanded for transactions = $150 billion; quantity of money demanded as an asset = $10 billion at 12 percent interest, increasing by $10 billion for each 2-percentage-point fall in the interest rate. 1. Present the data graphically using the space provided on the left. Properly label the graph. 2. What is the equilibrium interest rate in Greatcy? 3. At the equilibrium interest rate, what are the quantity of money supplied, the total quantity of money demanded, the amount of money demanded for transactions, and the amount of money demanded as an asset in Greatcy? Quantity of money (M) supplied = $_______ Total quantity of money (M) demanded = $______ Amount of M demanded for transactions = $______ Amount of M demanded as an asset = $______ Refer to the table for Roolanda: Money Supply $500 500 500 500 500 Money Demand $800 700 600 500 400 Interest Rate 2% 3% 4% 5% 6% Investment at Interest $80 70 60 50 40 Potential Real GDP $350 350 350 350 350 Actual Real GDP at Interest $390 370 350 330 310 4. Answer the following questions: What is the equilibrium interest rate in Roolanda? __________________ What is the level of investment at the equilibrium interest rate? ______________ Is there either a recessionary output gap (negative...
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...Jordan Foster 4-27-14 ECON 2020, Spring 2015 Critical Thinking Assignment, worth 20% of your final grade * Carefully read each question and determine each thing you are asked to address in your response * Write as full and complete a response as possible not a sentence or two. * Use complete sentences and paragraphs in Standard English. * Use a word processor to prepare your response. * Format your responses in the writing standard you used in your English composition class. This Assignment is due by April 30, 2015. You need to submit both hard and electronic copies by the due date. No assignment will be accepted after April 30, 2:25 p.m. Hand written responses are not accepted, and will receive an “F” grade In Metropolitan City the demand for rental housing is given by the demand equation P=1000-0.1Qd, while the supply for rental housing is given by the equation P=200+0.3Qs. Use this basic information to answer the question below. Questions 1. What is the equilibrium price for rental housing in Metropolitan City?$800.00 2. What is the equilibrium quantity of rental housing in Metropolitan City? 2000 3. If the government sets the price for rental housing in Metropolitan City at $500.00 what problem or issue of concern is likely to arise in the rental housing market in Metropolitan City? There will be a shortage because the demand for rental housing will exceed the quantity supplied. $500.00 is less than the equilibrium price of...
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...How Exports impact GDP Tiffany Cook March 19, 2015 Econ 214 (gwartney, 2015) “Gross domestic import is the market values of all final goods and sales” There are various factors that make up the subcategories of the United States, Gross domestic product. This definition tells us how we ultimately arrive at a calculations of the gross domestic products, but it does not shed light on the economies output and input and the benefits or setbacks each service may have. Some ways that we can look at expenditure approach is to know the wealth of what our goods and services can provide, also how these goods and services can be a come up or a setback dependent upon what we do more of. The expenditure approach allows us to see what our consumers have been benefiting from with the goods and services that have been provided to them by the US. Foreigners make up a portion of the GDP with imports, but in order for us to be on the winning side we would have to provide other countries with more of our products for them to buy or consume. Therefore the greatest impact on GDP is what we export in order to gain a profit from the consumer. If we were the consumer we would be looking to do the same. The economies main goal is to make the money and keep more of it. Exports allow us to do more of that, imports gives us resources to supply the source products for us to export. (Deekay, 2009)States that “export instability stimulates inflation. When inflation rises in a country the products tend...
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...BIRLA INSTITUTE OF TECHNOLOGYA AND SCIENCE, PILANI Fundamentals of Finance and Accounting- ECON C211 Second Semester 2008-09 Comprehensive Examination Maximum Marks: 40 Duration: 3 Hours Date: 4/5/09 PART A Instructions for Part A: Answer all the questions from 1 to 36. Answer the questions in the separate answer sheet provided. Each question caries equal marks. Do not write anything on the question paper. Exchange of Calculators not allowed. Overwriting/ unclear answers will not be evaluated Suggested Time: 30 minutes (0.5*36= 18 Marks) For questions 1 to 18 , mark the correct option: The currency of China is: Renminbi Kuna Lev Pula When there are three parties to a lease contract, namely the lessor, lessee and lender, it is called a: Sales and lease back Direct lease Leveraged Lease Operating lease _____________ gives loans to its members primarily for consumption purpose like marriage, retiring debt: Investment Companies Nidhis Loan Companies Merchant Bankers All of the following are characteristics of hire purchase finance except: Payment is made in periodic installments Ownership gets transferred with initial down...
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...ECON 1002 Macroeconomics Suggested answers Tutorial 4 Equilibrium and the Aggregate Expenditures Model In this tutorial we return to Funland (from LA2 in Module 4) and explore the concept of equilibrium with the Aggregate Expenditure model. Please note you will learn this conceptual material by doing it yourself. Copying answers from friends will mean you do not really learn which will then be a big disadvantage for you in the mid-semester test. Suppose that Funland people consume 75 cents for every extra dollar they earn (and conversely save 25 cents for each extra dollar). Assume that autonomous consumption is $200 (i.e. what is spent regardless of income). Assume there is no external sector and no government expenditure yet, so Aggregate Expenditure is just C+I. 1. What is the formula for the consumption function? C = Cauton + ɑ(Y) C = 200 + 0.75Y Assume the Funland Bureau of Statistics employ you as an economist to complete the following table (Table One). They want to model what will happen if there is a planned $100 million of investment injection for that year. Because they know the consumption function they can work out the consumption level at different income levels. Savings can also be calculated because in this simple economy what is not consumed from income Y becomes savings (S). 2. Complete the missing cells in the table. The formula from i. will give you the C numbers. From this you can calculate Aggregate Expenditure You can then deduce S...
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...ECON 252 Fall, 2012 Name Chapter 7 homework (50 pts.) Due Wednesday, October 24, 2012 1) (Explicit and Implicit Costs) Determine whether each of the following is an explicit cost or an implicit cost: a) Payments for labor purchased in the labor market b) A firm’s use of a warehouse that it owns and could rent to another firm c) Rent paid for the use of a warehouse not owned by the firm d) The wages that owners could earn if they did not work for themselves 2) (Alternative Measures of Profit) Calculate the accounting profit or loss as well as the economic profit or loss in each of the following situations: a) A firm with total revenues of $150 million, explicit cost of $90 million, and implicit costs of $40 million b) A firm with total revenues of $125 million, explicit cost of $100 million, and implicit costs of $30 million c) A firm with total revenues of $100 million, explicit cost of $90 million, and implicit costs of $20 million d) A firm with total revenues of $250,000, explicit cost of $275,000, and implicit costs of $50,000 3) (Production in the Short Run) Complete the following table. At what point does diminishing marginal returns set in? Units of the Variable Resource Total Product Marginal Product 0 0 — 1 10 — 2 22 — 3 — 9 4 — 4 5 34 — 4) (Costs in the Short Run) Identify each of the curves in the following graph: 5) (Total Cost and Marginal Cost)...
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...Name: Vijay Srivastav Subject: Econ 202 Class: Summer 2016 Section: SF1 Instructor: Dr. William D. Hermann Date: 06/27/2016 I. 1. The United States and Mexico have sign NAFTA along with Canada in the year 1994, which allowed all the three-nation to demolish trade barriers among them. Mexico is a developing nation, a developing nation faces major challenges in the form of lack of infrastructure, lack of investment and lower living standards. Whereas, The USA, is a developed nation and always thrives over any investment opportunities. This disparity helped both nations to mutually benefit each other. The companies in the USA moved to Mexico in search of cheap labor, land and attractive government policies. On the other hand, Mexico benefited by trading farm product, dairy, and remittances from workforces. However, over the period of time, the factor of production which were in favor of the USA have depleted. The reason for this change is due to the emergence of other competitors such as India and China. Those products, services, and facilities which were generating revenue for Mexico are now challenged by the countries like China and India. The reason for this shift is due to comparatively higher wages, unrest in society, corruption in government, and underdeveloped infrastructure. This is further accelerated by phenomena of globalization which removed many trade barriers between east and west. 2. Consumer surplus is the amount a buyer is willing to pay for...
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.../ 387 BUSINESS ADMINISTRATION Master of Business Administration Accredited by AACSB International, the Association to Advance Collegiate Schools of Business with concentrations in: Accounting Cyber Security Entrepreneurship Finance Global Business Information Systems and Technology Management Marketing Management Supply Chain Management Master of Business Administration for Executives Master of Business Administration for Professionals College of Business and Public Administration Jack Brown Hall, Room 282 (909) 537-5703 mba.csusb.edu MASTER OF BUSINESS ADMINISTRATION Requirements (48 units) The Master of Business Administration (M.B.A.) program provides postbaccalaureate students with a high-quality master-level education in the field of business administration. The program is designed to prepare promising students for positions of increasing responsibility and leadership through education in the broad scope of business and through in-depth knowledge in one or more specialized areas of business. The program is open to all qualified students, regardless of undergraduate major. Students who do not have a background in the area of business administration can obtain this required capability by completing designated prerequisite courses or through individual study with competency demonstrated through credit by examination or by demonstrated work experience. Admission to the M.B.A. Program In addition to the general requirements of the university, specific requirements...
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...MOSHI COMPUTING CENTRE BUSINESS PLAN Disclaimer: This is a MCC business plan, so the company and business information are fictitious. This plan reflects our standard business plan model, and changes in outline and structure can be made as per client specifications. GENERAL COMPANY DESCRIPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 MARKETING PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 C.Market Growth : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 E.Market Demand : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 G.Market Potentials : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 H.Market Opportunities : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....
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...11 Issues Chapter of Reporting, Disclosure and Financial Analysis Questions for Review and Discussion 1. The two main adjustment are likely to be the addition of capital assets and longterm obligations. 2. The main adjustments are likely to be: the addition of depreciation expense and gains or losses from the sale of capital assets and the deletion of amounts spent to acquire capital assets and the proceeds from the sale of capital assets the deletion of long-term debt proceeds and amounts spent to repay long-term debts and the addition of any gain or loss on the retirement of debt and the amortization of any debt premium or discount. 3. The key criterion is financial accountability the primary government either appoints a voting majority of the units governing body or a majority of the units governing body is composed of primary government officials and the primary government is able to impose its will upon the potential component unit or there is the potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government. 4. Discrete presentation is when one or more component units are reported in separate columns, in addition to those pertaining to the primary government. Blending is when the component units transactions and balances are reported as if they were part of the primary government that is, the component units funds are accounted for just as they were funds of the primary government. Blending is...
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