Compute opportunity loss or regret matrix which decision

Assignment Help Microeconomics

Reference no: EM13396061

S&B Manufacturing Inc., a manufacturer of packaging products is attempting to select a short run strategy which maximizes the long run value of expected future profits. Their long run value will depend upon their competitor's response. The controller projects the following expected future profits, cost and revenue equations.

States of Nature

S&B's

Decision

Alternatives

Maximize

Revenue

Maximize

Profits

Maximize Revenue

$6 million

$8 million

Maximize Profit

$2 million

$14 million

TR = 1600q -2q²

P = 1600-2q

MR = 1600 -4q

q = 50L^1/2k^1/2

MP_L=25L^-1/2k^1/2

MP_K=25L^1/2k^-1/2

Price of Labor = $25

Price of Capital = $100

MC = 2

A) Which decision alternative should S&B chose given a maximin criterion?

B) Calculate the opportunity loss or regret matrix.

C) Which decision alternative should S&B chose given a minimax regret criterion?

D) Given your answer to part A compute following:

1. Optimal Price

2. Optimal Output

3 Optimal Quantity of Labor

4. Optimal Quantity of Capital

5. For their optimal output calculate Marginal Product of Capital and Marginal Product of Labor.

6. For their optimal output what is the Marginal Rate of Technical Substitution?

7. For their optimal output show whether they using the least cost combination of labor and capital?

Reference no: EM13396061

Questions Cloud

Analyze the key issue that prompted the eu to take the : write a four to five 4-5 page report that answers the following1.analyze the key issue that prompted the eu to take the

What are the three main types of trend models what are the : what are the three main types of trend models? what are the advantages and disadvantages of each trend model?name and

What is a bottle bill and how does it work hint this is : what is a bottle bill and how does it work? hint this is sometimes called a beverage container-deposit refund program.

Examine how matter is transported through your selected : write a 500 word paper in which your team examines the framework of wetlands ecosystem and how it functions. in your

Compute opportunity loss or regret matrix which decision : sampb manufacturing inc. a manufacturer of packaging products is attempting to select a short run strategy which

List the kinds of plastics give the plastic resin type : recycling is an important approach to dealing with our msw however recycling plastics produces some problems.1 list the

In analog technology compare and contrast the advantages : write a 3- to 5-page paper that provides a detailed technical analysis comparing the advantages and disadvantages of

Normarsquos cat food of shell knob ships cat food : normarsquos cat food of shell knob ships cat food throughout the country. norma has determined that through the

Administrative ethics paper grading criteria on your : resource administrative ethics paper grading criteria on your student website find a current administrative issue in a

User Account

All Pages