Reference no: EM131098865
EverKleen Pool Services provides the weekly swimming pool maintenance in Atlanta. Dozens of firms provide this service and the service is very standardized (so the market can be assumed to be perfectly competitve for modeling purposes). The market price for a one month pool service contract is $115.
EverKleen Pool Services has fixed costs of $3,500. The manager of the company has estimated the following marginal cost function, using data for the last two years. SMC=125-0.42Q+0.0021Q^2
a. Given the esimated marginal cost function, what is the average variable cost function for Everkleen?
b. At what output level does AVC reach its minimum value? What is the value of AVC at this point?
c. Should the manager of EverKleen continue to operate or should the firm shut down? Explain.
d. What is the level of output that is optimal for EverKleen? (Note: you will find 2 output levels that are solutions to your optimazation specification. Make sure to test which was is actually the optimal level of output)
e. How much profit (or loss) can the manager of EverKleen Pool Services expect to earn?
f. Suppose EverKleen’s fixed costs rise to $4,000. How does this affect the optimal level of output? Explain
|
Suppose the football market is competitive
: Consider the market for footballs. Suppose the demand for footballs is given by F= 50/P − 1. (1) Suppose further that the marginal private cost of producing footballs is $10 per football. Also assume that pollution from the leather tanning process is..
|
|
What is the producer surplus in market equilibrium
: Suppose U.S. Steel has a steel factory on the Monongahela River in Southwestern PA. Suppose further that steel is sold in a competitive market at a price of $5 per unit. The private marginal cost of steel production is MC(s) = 2 + 0.5s. What is the p..
|
|
Short-run-long-run effects of the chemical spill
: In 2014 the water supply for a large area near Charleston, WV was polluted by a chemical spill, creating a health hazard, causing residents to spend time and money acquiring bottled water, and resulting in negative press coverage on the quality of li..
|
|
Decentralized manufacturing strategy
: An electronics firm is considering how best to supply the world market for microprocessors used in consumer and industrial electronic products. A manufacturing plant costs about $500 million to construct and requires a highly skilled workforce. Shoul..
|
|
Assumed to be perfectly competitve for modeling purposes
: EverKleen Pool Services provides the weekly swimming pool maintenance in Atlanta. Dozens of firms provide this service and the service is very standardized (so the market can be assumed to be perfectly competitve for modeling purposes). At what outpu..
|
|
In terms of maximizing total revenue
: In terms of maximizing total revenue, defend or counter the decision of the store, Manor, to lower prices on mobile air-conditioning units from 650 CHF to 300 CHF during the hottest week of 2010 (argument should make use of the concept of elasticity)..
|
|
Affect the economy-wide supply of labor
: How would each of the following factors likely affect the economy-wide supply of labor? Who gains and who loses?
|
|
What is the total unemployment rate
: Suppose that a nation has a labor force of 100 people. In January, Amy, Barbara, Carine, and Denise are unemployed; in February, those four find jobs, but Evan, Fancesco, George, and Horatio become unemployed. What is the structural unemployment rate..
|
|
Appear to be examples of competitive markets
: Grocery stores and gas stations in a large city would appear to be examples of competitive markets. There are numerous, relatively small sellers, each seller is a price taker and the products are quite similar. Is is possible these markets are perfec..
|