1. Define explicit and implicit costs. The opportunity cost equal to what a firm give up in order to use factors which in neither in purchases or hires. It’s the opposite of an explicit cost, which is borne directly. 2. Define Normal Profit and explain why it is an implicit cost. The difference between total revenue and total costs (explicit and implicit costs) equals zero, and it is an implicit cost because opportunity cost is considered in it. 3. Define Economic Profit, Short Run and
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production that will maximize profit or minimize losses? • A. Comparing total revenue to total cost or marginal revenue to marginal costs • B. Comparing average revenue to average costs or marginal revenue to marginal costs • C. Comparing average variable costs to price or marginal revenue to price • D. Comparing total revenue to average variable costs or price to average variable costs Bottom of Form Correct : A firm can look at two factors when considering whether it is maximizing
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Final Business Proposal Final Business Proposal In 2009, Colgate-Palmolive Company introduced Colgate Wisp, a disposable and portable on-the-go toothbrush with built-in toothpaste that promises a just-brushed, clean feeling (Colgate-Palmolive Annual Report, 2009). The product performed well for a few months, but loses its grip in the market scene since then. There was a market plunge for Colgate Wisp and the revenue plummet. The goal of the firm is to boost its sales once more, and be able
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revenue and its total cost. • A firm's total revenue is defined as the quantity, Q, sold at a price, P(q): TR(q) = P(q) ∙ Q • A firm's total costs are defined as the quantity of capital, K, used multiplied by the price of capital, v, plus the quantity of labor, L, used multiplied by the price of labor (wage rate), w. TC = vK + wL • Therefore, economic profits (π), are defined as the difference between total revenue and total cost: Π(q) = TR(q) – TC(q)
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Bread Produced | Cost of Ovens | Cost of Workers Per Week | Total Cost | 0 | 2 | 0 | 500 | 0 | 500 | 1 | 2 | 50 | 500 | 450 | 950 | 2 | 2 | 125 | 500 | 900 | 1400 | 3 | 2 | 210 | 500 | 1350 | 1850 | 4 | 2 | 300 | 500 | 1800 | 2300 | 5 | 2 | 410 | 500 | 2250 | 2750 | 6 | 2 | 550 | 500 | 2700 | 3200 | 7 | 2 | 625 | 500 | 3150 | 3650 | 8 | 2 | 660 | 500 | 3600 | 4100 | 9 | 2 | 700 | 500 | 4050 | 4550 | 10 | 2 | 730 | 500 | 4500 | 5000 | Average total cost=Total costTotal output
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product: Q = 120,000 − 10,000P where Q is the quantity demanded per year and P is the price per lamp. The firm’s fixed costs are $12,000 and variable costs are $1.50 per lamp. a. Write an equation for the total revenue (TR) function in terms of Q. b. Specify the marginal revenue function. c. Write an equation for the total cost (TC) function in terms of Q. d. Specify the marginal cost function. a. Total revenue function in terms of Q: We rewrite the demand curve in terms of Q. P=(120,000-Q)/10
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company’s production function to be Q = 300L2K, where Q is the number of bottles of water produced each week, L is the hours of labor per week, and K is the number of machine hours per week. Each machine can operate 100 hours a week. Labor costs $20/hour, and each machine costs $1000 per week. Suppose the firm has 20 machines and is producing its current output using an optimal K/L ratio. How many people does the firm employ? Assume each person works 40 hours a week. Recent technological advancements have
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Revenue= Fixed cost + Variable Cost (1) Fixed Cost= Paid up Capital+ Deal Value Fixed cost= 1.25+10 Variable cost and the total revenue depends on the number of units sold. Let the number of units sold be x. Selling price of each tractor= 0.19 Assuming break even in first year itself 0.19*x= (1.25+10) + (0.155*x) + (0.12/300)*x + (0.06/300)*x + (0.504+0.396+0.144+0.143+0.480) Overhead expenses, Sales expenses, Depreciation, Interest paid, Salary and wages are considered as fixed cost for the
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price would cost $2 the antihistamine would be demanded by 197 customers. d. How many doses will suppliers want to sell if the price is $2? From the data provided if the price would cost $2 the antihistamine would be sold by 184 suppliers. e. Is there excess supply or excess demand at $2? From the data provided if we apply the formula: Qd-Qs= 197-184= 13 of excess demand f. What is the equilibrium price? How can you tell? From the data provided we can tell that when the price cost is $5 the
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Marginal Analysis Task 1 Before a company can know the maximum profit to obtain for their industry, they must review and consider many factors. Some of the concepts that are analyzed when making business product decisions are Marginal revenue, marginal cost, profit-maximizing and total cost. Marginal revenue is the total revenue charged when one more unit of output is produced. When you multiply the unit price by the quantity the company can sell this determines the total revenue earned. When
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