Question 2. Company XYZ produces and sells widgets. Production is done at two separate factories, one in Mississauga and one in Scarborough. An analysis reveals that in the Mississauga location, it costs 1 59³+10000 (dollars) 50 to produce q widgets in a month, while in the Scarborough location it costs Cs(q) =q² + 20000 (dollars) СM (9) = to produce q widgets in a month. The company needs to fulfill orders for a total of 400 widgets in the month of March 2023. (a) How many widgets should each location be assigned to produce so that the total cost of production is minimized? (b) Due to differences in quality control and shipping costs, company XYZ decides to sell widgets produced at each factory at different price levels: widgets produced in Mississauga are to be sold for $2000 each, and widgets produced in Scarborough for $2800 each. Show that it is most profitable for the company to allocate all production to Scarborough.

Question 2. Company XYZ produces and sells widgets. Production is done at two separate factories, one in Mississauga and one in Scarborough. An analysis reveals that in the Mississauga location, it costs 1 59³+10000 (dollars) 50 to produce q widgets in a month, while in the Scarborough location it costs Cs(q) =q² + 20000 (dollars) СM (9) = to produce q widgets in a month. The company needs to fulfill orders for a total of 400 widgets in the month of March 2023. (a) How many widgets should each location be assigned to produce so that the total cost of production is minimized? (b) Due to differences in quality control and shipping costs, company XYZ decides to sell widgets produced at each factory at different price levels: widgets produced in Mississauga are to be sold for $2000 each, and widgets produced in Scarborough for $2800 each. Show that it is most profitable for the company to allocate all production to Scarborough.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter4: Extent (how Much) Decisions

Section: Chapter Questions

Problem 3MC

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1. Exercise 9.1 A study of 86 savings and loan associations in six northwestern states yielded the following cost function. 2.38 0.006153Q 0.000005359Q² 19.2X1 C + + (2.62) (2.84) (3.16) (3.50) where C = average operating expense ratio, expressed as a percentage and defined as total operating expense ($ million) divided by total assets ($ million) times 100 percent. Q = output; measured by total assets ($ million) X1 = ratio of the number of branches to total assets ($ million) Note: The number in parentheses below each coefficient is its respective t-statistic. Which of the variable(s) is (are) statistically significant in explaining variations in the average operating expense ratio? (Hint: t0.025,7€ 1.99 .) Check all that apply. X1 Q2 What type of average cost-output relationship is suggested by these statistical results? Quadratic Linear Cubic Based on these results, what can we conclude about the existence of economies or diseconomies of scale in savings and loan associations in…