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1.Wheat can only be sold at a central market place M. All producers that do not produce it at M need to haul it there in 11order to sell it and will incur transportation cost. People are willing to pay $222 per ton of wheat; its marginal production cost equals $10 per ton. Freight cost per ton and mile is given by T=2x0.5, where x denotes the distance from M in miles. (a) Calculate the maximum distance to the east of M at which the good will be produced. (b) Do the transportation cost exhibit increasing, decreasing or constant economies to distance?
2. Refer to the one-directional (just to the east) von-Thünen Model and assume that the willingness-to-pay for wheat is $42.50 per bushel. Marginal cost production equals $7.50 per bushel and fixed production cost is $10. a) We find that the marginal wheat fields (i.e., those with the maximum distance from the market place) are located 5 miles from the market place. Assuming constant marginal transportation cost, what is t? b) What is the land rent at x=0
3. Assume the distance between the resource (R ) and the market (M) is 10 miles. A firm’s procurement cost is given by PC=20+9x, where x is the distance from the resource measured in miles. The firm’s distribution cost is given by DC=(10-x)3. Again, x is the distance from the resource. (a) What is the Total Freight Cost at x=10, x=5, x=0. Where should the firm locate? (b) How does your answer to all parts under (a) distribution cost also includes a fixed (i.e., distance-independent) cost of 20?
Suppose the demand for Brand A Ice Cream is characterized by the following point elasticities: own price elasticity = -0.8 cross-price elasticity with Brand B Ice Cream = +2 income elasticity = +3 Based on the given elasticities, What happens to the ..
Elucidate how a profit from selling the drug. This is, in part, due to the fact to the company spent $1.2 billion developing the drug also obtaining FDA approval.
A college student in her senior year is considering purchasing a new car. The price of the car is $18,500, the sales tax is 8%, and the title, license, and registration fee is $450. The dealer offered to finance 90% of the price of the car for 48 mon..
Adam Smith discussed how nations could benefit from trade, known as absolute advantage. What was David Ricardo’s improvement on Smith’s theory? How does it differ?
Brenda and Lela are sisters. They both like to make ice cream and cake. Brenda makes one batch of ice cream in eight hours and bakes a cake in two hours. Lela makes one batch of ice cream in 10 hours and bakes a cake in 5 hours. Who has the absolute ..
When the average product is decreasing, then marginal product
Why are companies using more technology input while reducing labour input. Why are Average Cost Curves U-shaped. Illustrate what is Law of Diminishing Returns.
RAND study found that the income elasticity of demand for dental care is 0.15. Over the last one decade, income of the population has increased by 21%. Therefore, the income effect alone should a)Increase the demand for dental care by about 3% b)Incr..
Explain how you would exceed customer expectations by creating value. How does perceived value differ from actual value? What are the costs of diminished perceptions of customer value? In your answer, focus on a particular industry and create a scena..
Consider an economy where, consumer’s utility function is given as U(C,L)=C-(1/2)L2 . where C is consumption and L is labor. The production technology is Y=(1.6)L-(1/2)L2 . The turnover cost per labor is (0.36)/(w/p). What happens to t as real wage i..
A new good or service for an existing business or a business that you want to develop and how will you determine the profit-maximizing quantity?
???According to Keynes, why might deflation create problems for an economy?
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