Which of the following statements is incorrect? A)MC curve passes through the minimum point of the ATC curve. B)When MC is higher than ATC, AVC decreases as the output increases. C)The vertical distance between ATC curve and AVC curve decreases as the output increases. D)When MC is lower than AVC, ATC decreases as the output increases.
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- Set all variables to their baseline values.9) At what level of output is average cost a minimum?10) What is average cost (AC) at that output?11) What is marginal cost (MC) at that output? BASELINE COSTS TC (BASE) $175,113 AC (BASE) $43.78 MC (BASE) $64.12 NEW COSTS TC (NEW) $175,113 AC (NEW) $43.78 MC (NEW) $64.12 POLICY VARIABLES Output 4,000 Fixed cost 25,000 Tax per unit $0.00 AC(NEW)-MC(NEW) -$20.34QUESTION Given TC = 100 + 60Q – 12Q2 + Q3 find: (a) The equations of the TVC, AVC, and MC functions. (b) The level of output at which AVC and MC are minimum, and prove that the AVC and MC curves are U-shaped. (c) Find the AVC and MC for the level of output at which the AVC curve is minimumA company produces commercials. A 2-minute commercial, for example, needs exactly 5 minutes of filming and 8 minutes of editing. Let x1 denote the minutes of filming and x2 denote the minutes of editing. a) Write down the production function and state whether it has increasing, constant, or decreasing returns to scale b) Suppose that filming costs $45 per minute and editing costs $10 per minute. To produce a 5-minute commercial, how many minutes of filming and how many minutes of editing is needed to minimize cost? c) Suppose that filming costs w1 per minute and editing costs w2 per minute. Let y denote the length (in minutes) of commericals produced. derive the conditional factor demand functions x1(w1,w2,y) and x2(w1,w2,y) and its cost function c(w1,w2,y)
- Let c(x) be the cost of producing a product of x units. Given that c(x) follows the experience cost curve, c(x)= k(1 – b) xb-1 where k and b are constants and 0 < b < 1. Show that c(x) is a decreasing function, in this case. production costs show a downward trend with an increase in the number of products produced! Is this function a convex function? Explain!Which of the following does not have a U-shaped curve? a) The AC curve b) The AVC curve c) The AFC curve d) The MC curveQno1. You have been hired by Kia as manager for its Pakistan operations. Assume following is the short-run production function at their assembly plant outside Karachi: Q = 10L2 – 0.5 L3 where L is variable input labor, Q is output of Cars assembled Required. a) .Find the ranges of the three stages of production. b) .Demonstrate the relationship between Total Production, Marginal Product and AverageProduct in a hypothetical graph and clearly label the three stages as per the values of Lyou observed in (a) above . c). At the end of the year it is expected that output will double with purchase ofnew equipment and machinery. The production function is estimated to be Q = 60L.30K.70 where L is labor and K is capital.Suppose initial L1 = 1 and K1 = 1. When inputs are in increased to L2 = 2 and K2 = 2,do you observe increasing, decreasing or constant returns to scale? d). Assume Kia Head Office is considering hiring more laborers either at their Gwadarplant or…
- The cost curve for producing widgets passes through the following points and is piecewise linear in between. Solve, f. What is the fixed cost per unit for producing 1,000 widgets? g. What is the variable cost per unit for producing 1,000 widgets?4. Variouss measures of cost Douglas Fur is a small manufacturer of fake-fur boots in San Diego. The following table shows the company's total cost of production at various production quantities. Fill in the remaining cells of the following table. Quantity Total Cost Marginal Cost (Dollars) Fixed Cost Variable Cost Average Variable Cost Average Total Cost (Pairs) (Dollars) (Dollars) (Dollars) (Dollars per pair) (Dollars per pair) 120 1 200 2 240 3 285 4 340 425 6 540 On the following graph, plot Douglas Fur's average total cost (ATC) curve using the green points (triangle symbol). Next, plot its average variable cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol). (Hint: For ATC and AVC, plot the points on the integer; for example, the ATC of producing one pair of boots is $200, so you should start your ATC curve by placing a green point at (1, 200). For MC, plot the points between the integers:…A retail store in Makkah, receives shipments of a particular product from Jeddah and Taif. Let X be units of product received from Jeddah and Y be units of product received from Taif.a. Write an expression for the total units of product received by the retail store in Makkah. b. Shipments from Jeddah cost $0.20 per unit, and shipments from Taif cost $0.25 per unit. Develop an objective function representing the total cost of shipments to Makkah.c. Assuming the monthly demand at the retail store is 5000 units, develop a constraint that requires 5000 units to be shipped to Makkah. d. No more than 4000 units can be shipped from Jeddah and no more than 3000 units can be shipped from Taif in a month. Develop constraints to model this situation.e. Of course, negative amounts cannot be shipped. Combine the objective function and constraints developed to state a mathematical model for satisfying the demand at the Makkah retail store at minimum cost.
- You have been hired by Kia as manager for its Pakistan operations. Assume following is the short-run production function at their assembly plant outside Karachi: Q = 10L^2 – 0.5L^3 where L is variable input labor, Q is output of Cars assembled a. Find the ranges of the three stages of production. b. Demonstrate the relationship between Total Production, Marginal Product and AverageProduct in a hypothetical graph and clearly label the three stages as per the values of Lyou observed in (a) above. c. At the end of the year it is expected that output will double with purchase ofnew equipment and machinery. The production function is estimated to be Q = 60L^.30K^.70 where L is labor and K is capital. Suppose initial L1 = 1 and K1 = 1. When inputs are in increased to L2 = 2 and K2 = 2, do you observe increasing, decreasing or constant returns to scale? d. Assume Kia Head Office is considering hiring more laborers either at their Gwadarplant or alternatively at the Karachi plant.…The difference between ATC and AVC decreases with decrease in level of output.Given that TC=2000+100Q-10Q2+Q3 where Q is level of output and maximum level of MP is 15 units, answer the following question based on the given information. A. Determine the TFC ,TVC,AVC,AFC,AC and MC functions b. Calculate the level of output at which AVC and AC reaches its minimum c Draw the relationship between production and cost curve and What relationship do you observe between production and cost curves? Why is this so? G At 5 units AVC,APL is 10,what is the maximum APL?