Gus Bonilla MBA 217 Managerial Economics Individual Assignment 2) A firm’s product sells for $2 per unit in a highly competitive market. The firm produces output using capital (which it rents at $75 per hour) and labor (which is paid a wage of $15 per hour under a contract for 20 hours of labor services). Complete the following table and use that information to answer the questions that follow. K | L | O | MPK | APK | APL | VMPK | 0 | 20 | 0 | - | - | - | - | 1 | 20 | 50 | 50 | 50
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Chapter 05 Production and Cost Essay Questions 1. Always Round Tire has a production function of Q = 300 L.75 K.5. In the short run‚ if L = 250 and K = 25‚ what happens to the output of tires if L jumps to 300 and then 350. What law does this illustrate? When L=250 and K=25 then Q=94307. When L increases to 300‚ Q increases to 108‚127. When L increases to 350‚ Q increases to 121‚379. This shows the effects of diminishing marginal returns to labor as a factor of production. AASCB:
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|1. |The total product curve: | |B) |will become flatter as output increases‚ if there are diminishing returns to the variable input. | Use the following to answer questions 2-3: [pic] |2. |(Table: Total Product and Marginal Product) The marginal product of the second worker is: | |C) |20.
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Capacity Planning & Aggregate Production Planning Capacity Planning • Long term strategic decision • determines overall level of resources • affects product lead times‚ customer responsiveness & operating costs Capacity Planning Three Basic Strategies for Timing Capacity • Capacity Lead Strategy – capacity is expanded in anticipation of demand – aggressive and used to lure away customers from competitors already constrained Capacity Planning Three Basic Strategies for Timing Capacity • Capacity
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mexico: 20; in US: 25.. The firm is not maximizing its output. b. The firm should invest more in US. Q.8. Explain the difference between diminishing marginal returns and the diseconomies of scale? Diminishing returns to scale looks at how production output decreases as one input is increased‚ while other inputs are left constant. Diseconomies of scale occurs when the per unit cost rises as output is increased. Another major difference between diminishing returns and diseconomies of scale
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INDIVIDUAL ASSIGNMENT Q1. What is meant by the term resources? What are the four factors of production and explain the factors incomes associated with each factor of production (20 marks) a) Resources means being able to produce something that can be a good or service. For e.g. the sun‚ trees‚ natural gas‚ materials‚ staff. b) The four factors of production are land‚ labor‚ capital and entrepreneurship. (i) Land- is considered the natural resources or raw materials we find on the earths surface
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for a perfectly competitive poducer: (a) At a product price of $32‚ will this firm produce in the short run? Why‚ or why not? If it does produce‚ what will be the firm’s profit-maximising or loss-minimising output? Explain. Specify the amount of economic profit or loss per unit of output. (b) Answer the questions of (a) on the assumption that product price is $41. (c) Answer the questions of (a) on the assumption that product price is $56. (d) Looking at Table 2‚ complete the short run supply
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A retail dry cleaning store cleans two-piece suits for $12 each. Its patrons are individual "walk-ins." There are several similar dry cleaners in the city and this firm offers no special services. The firm can clean up to 1‚000 suits per week. It has fixed costs of $3‚500 per week (amortization on its equipment‚ rent‚ taxes‚ and salaries) plus a cost of $4 per suit for chemicals‚ packaging materials‚ order processing‚ and incidentals. Volume per week has been fairly constant at 600 suits. A firm
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Economic Analysis History of Timberland The birth of "Timberland" begins with Nathan Swartz‚ a young boot making apprentice stitcher ’ in 1918. At ten years of age the owner of the Abington Shoe Company took a chance and hired a much-needed young helper to learn the craft of boot making. Nathan ’s job responsibilities included stitching seams‚ cutting leather‚ attaching soles and perfecting the art of boot making. Thrity-four years later‚ Nathan furthered his interest in boot making by purchasing
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short run. II. All input costs are variable in the long run. III. At least one input price is fixed in the short run. (A) I only (B) II only (C) III only (D) I and II only (E) II and III only 3. Whichofthefollowingstatementsabouta firm’s production function are true? I. When total product is at its maximum‚ marginal product is zero. II. When total product rises‚ marginal product is rising. III. When marginal product is greater than average product‚ average product is rising. IV. Whenmarginalproductislessthanaverage
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