Economics of Enterprise Answers

Claudia has sold her car and received approval from the garage owner to re-lease her downtown reserved parking spot for the next four months so she can make some extra money. The rental fee is $200 per month, and she expects to charge $18 per day. Transportation in a car pool will cost her $6 per day. If there are a maximum of 20 work days per month for re-leasing the spot, determine the following: a. Total cost and revenue relations b. Breakeven quantity per month c. Amount of money she will make (or lose) if the number of re-leased days per month over the four-month period are 18, 12, 17, and 20.

Illustrated graphically what will happen to the firm’s profits in the long run in a perfectly competitive environment. Assume the firm is currently marking a loss

Wilson Partners manufactures thermocouples for electronics applications. The current system has a fixed cost of $300,000 per year, has a variable cost of $10 per unit, and sells for $14 per unit. A newly proposed process will add on-board features that allow the revenue to increase to $16 per unit, but the fixed cost will now be $500,000 per year. The variable cost will be based on a $48 per hour rate with 0.2 hour dedicated to produce each unit. Determine the annual breakeven quantity for the (a) Current system and (b) the new system. (b) Plot the two profit relations and estimate graphically the breakeven quantity between the two alternatives. (c) Mathematically determine the breakeven quantity between the two alternatives and compare it with the graphical estimate.

Under monopoly

any point lying on the product possibility curve indicate

1.      A company has the following demand equation

Q = 1000 – 3000 P + 10 A

Q = Quantity demanded

P = Product Price

A = Advertisement expenditure

Assume that P = 3 and A = 2000

Ø Suppose the firm drops the price to Rs. 2.50 would this be beneficial.

Ø Suppose the firm raises the price to Rs. 4.00 while increasing its advertisement expenditure by 100 would this be beneficial? Explain

How does the cost of production affect the Economic decisions of Households