User Account

All Pages

Calculate the values for the average variable cost

Assignment Help Econometrics
Reference no: EM13234629

The firm currently uses 50,000 workers to produce 200,000 units of output per day. The daily wage per worker is $80, and the price of the firm's output id $25. The cost of other variable inputs is 4000,000 per day.
Assume that the total fixed cost equals $1,000,000. Calculate the values for the following four formulas:

1. Total variable cost = (Number of workers* Worker's daily wage) + Other variable costs
2. Average variable cost = total variable cost/ units of output per day
3. Average total cost = (total variable cost + total fixed cost)/ units of output per day
4. Worker productivity = units of output per day/ number of workers

Then assume that total fixed cost equals 3,000,000, and recalculate the values of the four variables listed above. For both cases, calculate the firm's profit of loss.

For both sets of calculations, compare the firm's output price and the calculated average variable cost and average total cost.

Should the firm shutdown immediately when the total fixed cost equals $1,000,000?

Should the firm shut down immediately when the total fixed cost equals $3,000,000?

For one of the cases, if the firm can operate at a loss in the short-run, how many employees need to be laid off in order for the company to break even? To calculate the number of workers to be laid off, divide the loss for two situations by the daily wage per worker. Given a lower number of employees now working at the company, what is the change in worker productivity? Is the change in worker too large, and the firm should shut down immediately? Or in your opinion, can the workers increase their productivity, assuming that the units of output per day remain fixed at 200,000 units, so that the firm operates at a break even state?

Reference no: EM13234629

Questions Cloud

Describe an industry that would meet conditions of industry : The shape of the long-run cost curve is determined by economies and diseconomies of scale. Contrast this curve with the short-run cost curve as it relates to increasing and diminishing marginal returns to labor.
Compute the enthalpy per mole of sodium hydroxide : Calculate the enthalpy per mole of sodium hydroxide for the dissolution process. Assume the specific heat of the solution is the same as that for pure water.
Write program calculates and prints the average several int : Write a program that calculates and prints the average of several integers. Assume the last value read with scanf is the sentinel 9999
What is the amplitude and frequency of the resultant wave : Two traveling sinusoidal waves are described by the wave functions, What is the amplitude of the resultant wave, What is the frequency of the resultant wave
Calculate the values for the average variable cost : For both sets of calculations, compare the firm's output price and the calculated average variable cost and average total cost. Should the firm shutdown immediately when the total fixed cost equals $1,000,000
Provide an e-marketing plan for concrete : Provide an e-marketing plan for Concrete and More, a concrete resurfacing company in Texas. This should be an applicable e-marketing plan
What is the ph of hydrocyanic acid solution : A solution contains .294 M solution sodium cyanide and .0919 M hydrocyanic acid. What is the pH of this solution.
What frequency change is found by the speed detector : A car moving at 150km/h (93mph) is approaching a stationary police car whose radar speed detector operates at a frequency of 15Ghz
Explain electrolytic cells for producing aluminum operate : Commercial electrolytic cells for producing aluminum operate at 5 volts and 100,000 Amperes. How long does it take to produce 1000 kilograms of aluminum

Reviews

Write a Review

Econometrics Questions & Answers

  What is live theaters total revenue function

The inverse demand curves for each of the two groups are given below. The marginal cost (which equals the average variable cost) of serving an additional patron, either senior or everyone else, is equal to $4. Fixed costs are equal to $1000.

  Calculate the expected return from each technique

Sua suppose a farmer has some money of his own to invest in a better way to cultivate his land. there are two techniques, both of which require an initial start-up capital of $200. The first technique is risk free and generates a return of 20..

  Is ximing better off-the same or worse off

During his first year at school, Ximing buys eight new college textbooks at a cost of $50 each. Used books cost $30 each. When the bookstore announces a 20% price increase in new texts and a 10% increase in used texts for the next year, Ximings fa..

  Compute the effective interest rate per year

Jane invested $ 9,000 in a high yield bank account. At the end of 15 years she closed the account and received $299,000. Compute the effective interest rate per year she received on the account if the interest was compounded yearly.

  Calculate the proportion defective

To construct a p-chart for a manufacturing process, 25 samples of size 200 were drawn from the process. The number of defectives in each sample is listed below. a. Calculate the proportion defective in each sample. and b. Calculate the plot p-ba..

  Is this tax strategy successful in reducing smoking

Suppose the government places a $15 per carton excise tax on cigarettes in an effort to reduce smoking. Cigarette producers are required to pay this tax out of their revenues. Draw the supply and demand graph based on the original supply and deman..

  Determine present stream of accounting profits and economy

An owner can lease her building for $100,000 per year for three years. The explicit cost of maintaining the building is $35,000 and the implicit cost is $50,000. All revenues are received, and costs are borne, at the end of each year.

  What is population of freshman the distribution of number

A math test of 100 questions was given to a random sample of 20 freshman. Suppose that for the population of freshman the distribution of number of correct answers would be normal with a variance of 250. a) what is the probability that the sample v..

  Compute the demand of x under the new price

Cindy consumes goods x and y. Her demand for x is given by x(px, m) = 0.05m -5.15px. Now her income is $419, the price of x is $3, and the price of y is $1. b. Compute the demand of x under the new price.

  Finding the probability

An ice cream vendor sells three flavors: chocolate, strawberry, and vanilla. 45% of the sales are chocolate, while 30% are strawberry, with the rest vanilla flavored.

  Question about multiple regression

Assume that when using the multiple regression in the formula Y = b1X1 and b2X2 + E that X1 represents wages and X2 represents transportation expenses?

  What are consumption and saving in each period

What are consumption and saving in each period, assuming no borrowing constraints? What happens if the consumer faces a borrowing constraint that prevents her from borrowing?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd