instances, vertical integration. 9. a. When MC(L) = 30 + 4L, the optimal contract lengths sets this equal to the marginal benefit of $100, yielding L = 17.5. b. When MC(L) = 40 + 5L , the optimal contract length sets this equal to the marginal benefit of $100, yielding L = 12. c. When the marginal cost curve increases, the optimal contract length decreases. When the marginal cost curve decreases, the optimal contract length increases. 13. Capping pension fund managers’ compensations would reduce
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differentiation decrease with competition. Consumers benefit from the variety but production costs could be achieved if all the firms sold identical products (McConnell, Brue, and Flynn 2009). Keebler’s consumer’s demand of products is elastic, consumers can purchase similar products at a lower rate, but usually consumers prefer brand names. The goal of Keebler is to maximize total earnings (gross revenue - total operating cost). Given the state of the economy, Keebler could look to make a statement in the
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You have been hired to manage a small manufacturing facility which has cost and production data given in the table below. Don't do 6 or 9. See attached file. Q-3 Input Factors You have been hired to manage a small manufacturing facility which has cost and production data given in the table below. Total Total Workers Labor Cost Output Revenue 1 $500 100 $700 2 1000
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and the cost of workers is also fixed. Increasing: From workers 1 to 6 Diminishing: 7 to 8 What number of workers appears to be most efficient in terms of pizza product per worker? Ans.The most efficient number of workers are 6 which produce 190 pizzas per worker. What number of workers appears to minimize the marginal cost of pizza production assuming that each pizza worker is paid $500 per week? Ans.Six number of workers minimize the marginal cost of pizza production. The cost at this
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Justification of the huge salaries paid to some top athletes; an economic perspective. Over the last century there has been much research into the area of Labour Economics, and hence the determinants of supply, demand and wages for labour. In this essay, I will be looking at the unique example of the Sports Labour Market with specific focus on the European Football Market, and use various economic models to justify the huge salaries currently offered to top athletes within this field. The
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through history the physical number of goods made by dead artists like Picasso, however, the amount of works produced in the markets will depend on the marginal input cost, which increases prices and expected value of their goods Demand side of the market is a function that ultimately affects the price of a good/service. The law of diminishing marginal utility is an explanation of the negative sloped demand curve. Even though consumers want are unlimited, the wants from specific goods can be satisfied
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business Total cost = fixed costs + marginal costs Accounting profit from this standpoint is total revenue – the total cost = profit. Profit maximization from this standpoint is quite simply increasing your profit to as high a level as possible. 2. Marginal cost is the extra cost incurred per additional unit of product Marginal revenue is the extra revenue generated per additional unit of product A firm looking for profit maximization from the marginal revenue to marginal cost perspective is
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Basic Monopoly, First & Second Degree Price Discrimination Suppose you know the following about an industry that is a monopoly. Market Demand: P = 200 - .5Q Marginal Cost = 40 There are no fixed costs a) What is the marginal revenue curve for this monopoly? b) Find the profit maximizing quantity for this monopolist if it charges a single price for the good. c) Find the profit maximizing price for this monopolist if it charges a single price for the good. d) What do profits equal for this
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(Law of Diminishing Marginal Utility) Some restaurants offer “all you can eat” meals. How is this practice related to diminishing marginal utility? What restrictions must the restaurant impose on the customer in order to make a profit? (Answers may vary) The marginal utility derived from each additional plate of food will diminish as you become full. The marginal utility will continue to decrease until it reaches zero or becomes negative. Food shows diminishing marginal utility after a certain
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value creation potential of the firm’s business model. The approach adopted here is to enrich the concept of the business model with the various a series of theoretical concepts based on the theory of the firm. The principal theories are transaction cost economics (Williamson 1971, 1981, 1986), the resource based view (Wernerfelt 1984; Barney 1986, 1991; Deirickx and Cool 1989) and the relational view (Dyer and Singh 1998) of the firm. In addition the concepts of dynamic capabilities (Teece and Pisano
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