Microeconomics Answers

Swagat Manufacturing Sdn. Bhd. needed to determine if it would be cheaper to make 10,000 units of a component in-house or to purchase them from an outside supplier for $4.75 each.
Cost information on internal production includes the following:
Total Cost Unit Cost
$ $

Direct materials 10,000 1.00
Direct labour 20,000 2.00
Variable overheads 8,000 0.80
Fixed overheads 44,000 4.40
Total 82,000 8.20
Fixed overhead will continue whether the component is produced internally or externally. No additional costs of purchasing will be incurred beyond the purchase price.
Required:
b. Which alternative is more cost effective and by how much?
c. Now assume that the fixed overhead includes $10,000 of cost that can be avoided if the component is purchased externally. Which alternative is more cost effective and by how much?

Grandpa wants to renew his auto insurance. Let us suppose he can buy either a natural monopoly (no-fault) one or an oligopoly (liability). As a student in big business economics,
(a) What are four basic differences on pricing, risk, and premium
(b) Which one is better on:
- Efficiency ground and
- Equity ground

I need to explain fully how and why the firms the product and cost curves are functionally related thank you

A firm faces the production function Q = 10L2K2. The wage rate is 2 and the rental rate of capital is 1. What are the optimal amounts of L and K if the firm’s objective is to produce Q = 25, 000?

If the fixed cost were $25 and the variable cost per unit were $ 2 and the demand function as follows: P=20-Q
(a) Get π in terms of Q and plot the graph of him .
(b) Find the value of Q in break even point.
(c) Find the production level which gives $ 31 as revenue.
(d) Find the maximum profit and value of Q where the maximum profit is achieved.

Thank You...

A firm faces the production function Q = 10L2K2. The wage rate is 2 and the rental rate of capital is 1. What are the optimal amounts of L and K if the firm’s objective is to produce Q = 25, 000

The point price elasticity of demand for red herring is -4. The demand curve for red herring is Q = 120-P.
What is the price of red herring?

Price of Bananas Quantity Demanded of Bananas
$1 15
$2 6
$3 4
When the price is $3, a 10% decrease in the price of bananas will increase the quantity demand of bananas by____________.

Price of Bananas Quantity Demanded of Bananas
$1 15
$2 6
$3 4
When the price is $3, a 10% decrease in the price of bananas will increase the quantity demand of bananas by____________.

A consumer splits their income equally between two goods. If the price of one good
increases by 10% and their income increases by 5%, show that the consumer’s optimal
consumption bundle will change despite them being able to afford their original bundle.