Decisions in competitive markets

Assignment Help Macroeconomics

Reference no: EM1370065

1) The MidNight Hour, a local nightclub, earned $100,000 in accounting profit last year. This year the owner, who had invested $1 million in the club, decided to close the club. What can you say about economic profit (and the rate of return) in the nightclub business?

2) The manager of All City Realtors wants to hire some real estate agents to specialize in selling housing units acquired by the Resolution Trust Corporation (RTC) in its attempt to bail out the savings and loan industry. The commission paid by the RTC to the company to sell these homes is a flat rate of $2,000 per unit sold, rather than the customary commission that is based on the sale price of a home. The manager estimates the following marginal product schedule for real estate agents dealing in government owned housing:

Number of real estate agents Marginal Product Marginal
(number of additional revenue
units sold per year) product
1 20 ___________
2 17 ___________
3 15 ___________
4 12 ___________
5 8 ____________
6 4 ____________

a) Construct the marginal revenue product schedule by filling in the blanks in the table.

b) If the manager of All City Realtors must pay a wage rate of $32,000 per year to get agents who will specialize in selling RTC housing, how many agents should the manager hire? Why?

c) If the wage rate falls to $18,000 per year, how many agents should the manager hire?

d) Suppose the RTC raises its commission to $3,000 per units sold. Now what is the marginal revenue product for each real estate agent employed?

e) Now that the RTC is paying $3,000 per unit sold, how many agents should the manage hire if the wage rate is $30,000.

Reference no: EM1370065

Questions Cloud

Create program which asks for number of fat grams : Create a program which asks for number of fat grams and calories in a food item. Validate input as follows: Make sure number of fat grams and calories are not less than 0.

Show the personal reflection of environmental concerns : How big an issue is this for us, how much (if any) is business responsible for it and how much change (if any) is needed to get us on the right track

Competing in rapid-growth industries : Competing in rapid-growth industries - suitable strategy option for companies competing in rapid-growth industries?

Determining minimum variable costs of cost function : At what output is AVC at minimum? If the market price of firm's output is $7 per unit, should the firm produce or shut down?

Decisions in competitive markets : The MidNight Hour, a local nightclub, earned $100,000 in accounting profit past year. This year the owner, who had invested $1 million in club, decided to close club.

Determination of optimal price and output : Two firms face the demand equation given by P=200,000 -6(Q1 + Q2) where Q1 and Q2 are the outputs of two firms. The total cost equations for two firms are given by: TC1 = 8000Q1 and TC2 = 8000Q2.

Important information about scope creep : What are the 6 things that the implementation plan will do to prevent scope creep (unforeseen circumstances that can increase time and budget on a project)?

Show major environmental changes : What are two major environmental changes that you expect to have an impact on Oil and gas companies over the next 5-10 years?

Explain consumers union for american gender studies : Explain Consumers Union for American gender studies and Maybe include what led up to it ideologically/historically in terms of gender

User Account

All Pages