Adam is the owner of a small grocery store. Adam’s annual revenue is $200,000…
PART I: 20%
Question one: Adam is the possessor of a feeble grocery afford. Adam’s annual fruits is $200,000 and his entirety explicit consume (Adam pays himself an annual salary of $30,000) is $180,000 per year. A supertraffic compact wants to rent Adam as its unconcealed superintendent for $60,000 per year.
a) What is the turn consume to Adam of owning and managing the grocery afford?
b) What is Adam’s accounting gain?
c) What is Adam’s economic gain?
Question Two: A secure has the forthcoming entirety fruits and entirety consume functions:
a) At what raze of output does the secure maximize entirety fruits?
b) Define the secure’s entirety gain asp =TR -TC. At what raze of output does the secure maximize entirety gain?
c) How considerable is the secure’s entirety gain at its utmost?
Question three: Characterize each of the forthcoming statements as gentleman or fallacious, and clear-up your counterpart.
a) If final fruits is less than mean fruits, the ask-for incurvation allure be downward sloping.
b) Profits allure be maximized when entirety fruits resemblings entirety consume.
c) Marginal consume must be escheatment for mean consume to discard as output expands.
d) Marginal gain is the variety betwixt final fruits and final consume and allure frequently resembling naught at the gain-maximizing immateriality raze.
Question Four: The traffic for pizza has the forthcoming ask-for and afford schedules:
a) Graph the ask-for and afford incurvations. What are the makeweight compensation and portion in this traffic?
b) If the express compensation in this traffic were abovethe makeweight compensation, what would propel the traffic internal the makeweight?
c) If the express compensation in this traffic were belowthe makeweight compensation, what would propel the traffic internal the makeweight?
Question five: Suppose that employment travelers and vacationers possess the forthcoming ask-for for airline tickets from City X to City Y:
a) As the compensation of tickets rises from $200 to $250, what is the compensation elasticity of ask-for for (i) employment travelers and (ii) vacationers? (Use the arc elasticity system in your calculations.)
b) Why influence vacationers possess a divergent elasticity from employment travelers?
Part II: 20%
Question One: Mathematically manifestion that
Where MR is final fruits;epis compensation elasticity of ask-for
Question Two: TV is contemplating a T-shirt advertising preferment. Monthly sales facts from T-shirt shops trafficing the “Eye Watch KRMY-TV” cunning evince that
Q= 1,500 – 200P
where Qis T-shirt sales and P is compensation.
A. How sundry T-shirts could KRMY-TV vend at $4.50 each?
B. What compensation would KRMY-TV possess to accuse to vend 900 T-shirts?
C. At what compensation would T-shirt sales resembling naught?
D. How sundry T-shirts could be absorbed abroad?
E. Calculate the summit compensation elasticity of ask-for at a compensation of $5.
Question Three: Silkwood Enterprises specializes in gardening victuals. The ask-for for its new infamy of fertilizer, Meadow Muffins, is absorbed by the equation Q=120 -4P.
a. Silkwood is currently charging $10 for a pulverize of Meadow Muffins. At this compensation, what is the compensation elasticity of ask-for for Meadow Muffins?
b. At a compensation of $10, what is Silkwood’s final fruits?
c. What compensation should Silkwood accuse if it wishes to maximize its entirety fruits?
d. At the entirety fruits maximizing compensation, what is the compensation elasticity of ask-for for Meadow Muffins?
Part III: 20%
Question One: The forthcoming formation board provides estimates of the utmost amounts of output feasible delay divergent co-operations of two input factors, Xand Y. (Assume that these are sound usual summits on a spectrum of faithful input co-operations.)
a) Do the two inputs manifest the characteristics of unwandering, increasing, or decreasing final rates of technical superabundance? How do you comprehend?
b) Assuming that output vends for $3 per ace, entire the forthcoming boards:
c) Assume that the portion of Xis unwandering at 2 aces. If output vends for $3 and the consume of Yis $120 per day, how sundry aces of Yallure be populated?
d) Assume that the audience is currently unresisting 162 aces of output per day using 1 ace of Xand 3 aces of Y. The daily consume per ace of Xis $120 and that of Y is to-boot $120. Would you approve a fluctuate in the offer input co-operation? Why or why not?
Question two: The entirety consume equation of a secure is absorbed by the equation where TCis entirety consume and Qis the raze of output.
a. What is the secure’s entirety unwandering consume?
b. What is the equation for the secure’s entirety unsteady consume (TVC)?
c. What is the equation for the secure’s mean entirety consume (ATC)?
d. What is the equation for the secure’s final consume (MC)?