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1. Bob Edwards owns a bagel shop. Bob hires an economist who assesses the shape of the bagel shop's average total cost (ATC) curve as a function of the number of bagels produced. The results indicate a U-shaped average total cost curve. Bob's economist explains that ATC is U-shaped for two reasons. The first is the existence of diminishing marginal product, which causes it to rise. What would be the second reason? Assume that the marginal cost curve is linear. (Hint: The second reason relates to average fixed cost)
2. Explain how a firm in a competitive market identifies the profit-maximizing level of production. When should the firm raise production, and when should the firm lower production?
3. At its current level of production a profit-maximizing firm in a competitive market receives $12.50 for each unit it produces and faces an average total cost of $10. At the market price of $12.50 per unit, the firm's marginal cost curve crosses the marginal revenue curve at an output level of 1,000 units. What is the firm's current profit? What is likely to occur in this market and why?
4. There has been much discussion of deregulating electricity and natural gas delivery companies in the United States. Using your understanding of monopolies, discuss the likely effect of deregulation on prices in these two industries.
5. Explain the output and price effects which affect the profit-maximizing decision faced by the firm in oligopoly market. How does this differ from output and price effects in monopoly market?
Illustrate and fully describe using an example of relevant cost (a cost whose value does affect the optimal decision) and an example of irrelevant cost (a cost whose value does not affect the optimal decision) to the business regarding this decisi..
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Explain the law of diminishing returns in your own words. This idea can be applied to other concepts in economics. Think about your own utility from consumption. Give a personal example of diminishing utility.
Determine how the following situations will affect the demand curve for ipods.
Compute the marginal product of labor when 9 units of labor are utilized. Assume the firm can hire labor at a wage of $10/hr and output can be sold at a price of $100 per unit. Determine the profit maximizing levels of labor and output.
you must identify a franchise that is relatively new (less than 10 years old and fewer than 25 locations in Canada). You must then evaluate the attractiveness of the franchise for an identified location. The evaluation should include: Presentation ..
What are some the kinds of incentives for providers for efficiency in delivery of healthcare services. Describe who bears the financial risk, the provider, the patient, or the managed care organization?
Assume that as the result of recent labor negotiation, wage rates are reduced by 10% in the production procedure employing only capital and labor.
Angelica pickles manager a Quick copy franchise White Plains, New York. Pickles projects reducing copy 5¢ to 4¢ each, Quick Copy's $600-per-week profit contribution will increase by one-third.
Derive the FOC and SOC conditions of profit maximization for this firm. Show that SOC is satisfied (impose necessary conditions). Which plant will have a greater increase in output? Please explain why.
Economists make decisions by thinking in terms of alternatives. Why do economists thinks there is no such thing as a free lunch?
Assume the demand curve for a monopolist is Qd=500-P, and the marginal revenue function is MR=500-2Q. The firm has a marginal and average total cost of $50per unit.
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