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- Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $14. Division B produces Component X and has excess capacity. Using the following data, what would the transfer price per unit if Division A purchased Component X from Division B at the cost-based transfer price? Variable cost per unit $6.13 • Fixed cost per unit 1.73 • Division B sales price of Component X 14.50Perum Perindo operates 2,500 hectares of shrimp pond in Bratasena, Lampung. There are many players in this market, including the traditional shrimp farmers and big companies listed in the IDX stock market. The product in this market is relatively standardized. It is known that perum Perindo total cost function is TC= 20 + 4Q + 0.003Q2 and the market price for a kilo of shrimp is $16. a. Identify the market structure that perum Perindo operates inb. Find Perindo marginal costc. Find the equilibrium output leveld. Write the firm variable cost and average variable cost functione. At the equilibrium level of output that has been calculated in question c , find the firm average variable cost (AVC)f. At current price level, should the firm continue to produce or shut down it operation? ExplainThe demand equation for the deluxe marble kit produced by Whoville Marble Works (WMW) is p = 600 - 3q -0.01q² where p is the price WMW sets for the kit and q is the number of kits that they sell in a week. (a) Find the price that WMW should set to maximize their weekly revenue, the corresponding revenue maximizing output and their maximum weekly revenue. Round your answers to 2 decimal places. (b) Show how you know that the revenue you found in (a) is WMW's absolute maximum weekly revenue.
- Perum Perindo operates 2,500 hectares of shrimp pond in Bratasena, Lampung. There are many players in this market, including the traditional shrimp farmers and big companies listed in the IDX stock market. The product in this market is relatively standardized. It is known that perum Perindo total cost function is TC = 20 + 4Q + 0.003Q2 and the market price for a kilo of shrimp is $16. d. Write the firm variable cost and average variable cost functione. At the equilibrium level of output that has been calculated in question c , find the firm average variable cost (AVC)f. At current price level, should the firm continue to produce or shut down it operation? ExplainAfter implementing activity-based costing to estimate customer-level technical support costs, ABC Company found that customer A is profitable and customer B is unprofitable. What are reasonable ways to deal with customer B? (select ALL correct answers) Ocharge customer B a higher price per unit (assume that you can charge different customers different prices for the same product or service) Olimit the number of free technical-support calls per customer O charge a fee per technical-support call if nothing else works, "fire" customer B trick question -- it is impossible to estimate customer- level profitabilityDamai Biru Sdn. Bhd. is a firm selling homogenous product in a competitive market. It has the following cost curves: Price 10 MC ΑΤ AVC P1 P2 P3 P4 1 + +> Quantity Figure Q2 : various cost curves in a competitive market (i) Calculate the amount of profit earned by the firm if the price is P2, which is RM4.5 per unit. (i) Analyse whether the firm should continue its operation or to shut down as the price falls to P4, which is RM2 per unit. (ii) In the long run, firms in competitive market achieve allocative efficiency and productive efficiency in their production. Explain what is meant by allocative efficiency and productive efficiency.
- With the aid of appropriate diagrams describe what each of the following abatement cost curves are, who is likely to create them, who is more likely to use them and where relevant their advantages and disadvantages against each other: a) Marginal abatement cost curve.b) Expert derived abatement cost curve.c) Model derived abatement cost curve.Q. The Ali Baba Co. is the only supplier of a particular type of Oriental carpet. The estimated demand for its carpets is Q = 112,000 – 500P + 5M Where Q = number of carpets, P = price of carpets (dollars per unit), and M = consumers’ income per capita. The estimated average variable cost function for Ali Baba’s carpets is AVC = 200 – 0.012Q + 0.000002Q2 Consumer’s income per capita is expected to be $20,000 and total fixed cost is $100,0000. a. How many carpets should the firm produce to maximize profit? b. What is the profit-maximizing price of carpets? c. What is the maximum amount of profit that the firm can earn selling carpets? d. Answer parts a through c if consumers’ income per capita is expected to be $30,000 instead.Q. The Ali Baba Co. is the only supplier of a particular type of Oriental carpet. The estimated demand for its carpets is Q = 112,000 – 500P + 5M Where Q = number of carpets, P = price of carpets (dollars per unit), and M = consumers’ income per capita. The estimated average variable cost function for Ali Baba’s carpets is AVC = 200 – 0.012Q + 0.000002Q2 Consumer’s income per capita is expected to be $20,000 and total fixed cost is $100,0000. a. How many carpets should the firm produce to maximize profit? b. What is the profit-maximizing price of carpets? c. What is the maximum amount of profit that the firm can earn selling carpets? d. Answer parts a through c if consumers’ income per capita is expected to be $30,000 instead Please answer d only.
- Let the production function be Q = 4∗K1/4L1/4 assume that both factors are variable. (a) Derive the contingent demand functions for K and L (b) Substitute the contingent demand functions in the total cost that you minimized in part a) to obtain the total cost function. (c) FindtheamountofKandLnecessarytoproduceQ=8whenv=16andw=1 (with minimal possible cost). (d) Find the average and marginal cost functions.(a) A retail company has a marginal profit curve given by: MP =-2Q 2+ 160Q + 2145. Determine the level of production, or range of production at which the company will have: (i) Increasing returns (ii) Decreasing returns (iii) Negative returns (iv) Its maximum profit (b) A production process varies only with raw materials, as all other inputs are fixed. The cost of a shipment of 8kg of raw materials is fixed at $85. It takes 5kg of raw materials to create one item of output, Q. The marginal revenue for this production process is expressed by: MR = =Q 2 + 520 – 576. 2+52Q Determine the optimal amount of raw materials to be used in this production process. (c) A production process varies with both labour, L and raw materials, M. The production function is given: Q = 1.25L 0.38 +0.9M0.68 Current production level is Q= 800 items and marginal profit is given as a fixed $16.50. Determine what profit can be expected if: (i) Labour is increased by 25%. (ii) Both labour and raw materials are…1. Minimize the costs for a firm faced with the cost function C = 3x² + 2xy +5y² +500 subject to the production quota x + y = 36. Show that the costs are minimized. (a) Set up the Lagrangian objective function (b) FOCs to get the critical values and stationary value (c) SOCs to verify that C* is a minimum (using a bordered Hessian matrix).