Shaped average variable cost function of the form

Assignment Help Business Economics
Reference no: EM131742136

1. Strakers Industries estimated its short run costs using a u-shaped average variable cost function of the form AVC=a+bQ+cQ^2 and obtained the following results. Total fixed cost (TFC)at Straker Industers is $1,030.

Adjusted R Square 0.815

Standard

Coefficients Error t Stat P-value

Intercept 34.62 1.99 17.40 0.0033

Q -3.65 0.44 -8.36 0.0000

Q^2 0.18 0.02 8.92 0.0000

a. What level of output (Q) is associated with the minimum AVC? What is the value of AVC at this minimum?

b. Determine equations for ATC, TC, and SMC. Graph one scatterplot of Q vs. TC, and another scatterplot of Q vs. ATC, AVC, and SMC.

c. When output is 14, how much is TC, AVC, ATC, and SMC?

d. At what amount of output does labor change from exhibiting increasing returns to decreasing returns?

2. Suppose the market demand and supply functions are QD = 180 - 1.5P and QS = 3.5P + 40. You have just graduated and moved to this city; as a new MBA and an entrepreneur, you are considering entering the market for this product.

a. Determine the equilibrium price and quantity in this market.

b. You've researched and found that most firms in the market currently experience costs such that TC = 15 + 45Q - 10Q2 + 1.5Q3. Determine whether or not you should enter this market. Use graphs to support your answer.

c. Due to unforeseen delays, you don't enter the market. However, a year later the market supply has changed to QS= 3.5P + 10. Are you surprised at this shift in supply?

d. Given the new supply conditions, determine whether or not you should enter the market.

Reference no: EM131742136

Questions Cloud

Calculate degrees of freedom for each designs : Determine the critical values, or cutoffs, assuming a two-tailed test with a p level of 0.05, for each of the designs described in Exercise.
Discuss the economic effects of monopoly : Discuss the economic effects of monopoly. Be sure to include the following:
Examine the nature and scope of waste generators : Distinguish the traditional definition of international law with the emerging aspect of trans-governmental approach to contemporary international law.
Classified by the government as hazardous substance : "Though PFOA was not classified by the government as a hazardous substance,
Shaped average variable cost function of the form : Strakers Industries estimated its short run costs using a u-shaped average variable cost function of the form AVC=a+bQ+cQ^2 and obtained
What are the statistics within each type of organization : What employee assistance programs are available to each organization to help combat some of these issues?
Define correlation between variables a and b : There is a 0.86 correlation between variables A and B. The partial correlation between A and B, after controlling for a third variable, is 0.02.
What were the expectations and thoughts of the explorers : What were the expectations and thoughts of the explorers and colonizers who came to America
Appropriate price for the one-month memberships : Your job is to select the site for the 25th club and to determine the appropriate price for the one-month memberships.

Reviews

Write a Review

Business Economics Questions & Answers

  Economics assignment

This document contains various important questions and their appropriate answers in the subject field of Economics.

  Demand and supply curves

Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.

  Long-run perfectly competitive equilibrium for the firm

Evaluate Government intervene and correct this situation?(a) Explain the concept of a concentration ratio. A rise in the price of magarine Explain the impact of external costs and external benefits on resource allocation long-run perfectly c..

  Supply and demand diagrams

Explain each of the following using supply and demand diagrams,  With the use of a graph, explain how these two programs affect cigarette consumption and the price of cigarettes.

  Case study: fisher-price toys

The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.

  Draw the production possibility curve

Draw the production possibility curve and a. Define consumer surplus and producer surplus.

  Tax revenue

The Australian government administers two programs that affect the market for cigarettes

  Maximize total welfare

How many tickets to sell to maximize total welfare.

  Difference between the cv and the ev

The change in consumer surplus (?CS) is not "theoretically" justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change. Explain how this can be reconciled

  Depict von neumann-morgenstern utility index u in a diagram

Depict the von Neumann-Morgenstern utility index u in a diagram

  What is the market solution

What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution

  Calculate gross national product and net national product

Calculate gross national product and net national product

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!

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