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Crew Brew produces a popular brand of beer in its mini-brewery located on a small river in Kentucky. It uses a special formula, combined with the fresh water from the local stream, to produce a drink popular with local folks and tourists who visit during the summer fishing season, and autumn deer hunting season. The production function of Crew follows the formula: Q = 50K + 50L, where Q = barrels of beer, K = units of capital, and L = units of labor.
a) Assume that capital can be purchased for $8 per unit, and labor costs $6 per unit. What is the optimal combination of inputs for the firm to employ?
b) Assume that the cost of inputs changes to $7 for a unit of capital, and $9 for a unit of labor. What is the new optimal combination of inputs?
c) Explain the results of a. and b.
Suppose that perfectly competitive firm faces the market price (P) $5 per unit, and at this price the upward-sloping portion of the firm's marginal cost curve crosses its marginal revenue curve at an output (Q) level of 1,500 units.
Questions: : Which of the following are likely to be fixed costs and which variable costs for a chocolate factory over the course of a month? Explain your choice.
Compute the best response function of each firm in terms of prices. Compute the resulting equilibrium price quantity combination for each firm. Describe your answer with a suitable graph. Also calculate optimal profits of each firm.
Find out if, for the good marked with ALL CAP lettering, if there is the increase or decrease in demand.
What business will you go into, and what will comprise your fixed and variable costs? How could your business take advantage of economies of scale?
Find out the price p0 = S(q0) at which q0 units will be supplied and compute the corresponding producers' surplus PS. Sketch the supply curve y = S(q) and shade the region whose area represents the producers' surplus.
What are some things that would affect changes in supply? How can quantity demanded be changed and what if the government raised the minimum wage. How would this policy effect your firm?
How does an increase in the price of widgets affect the: And describe the effects in detail?
Changes in price do not always impact demand to the same degree, and in some cases change in price impact demand very little. Such goods are said to have relatively inelastic demand.
You're the marketing manager of a firm that produces Titanium and sells this metal to two distinct kinds of customers: aircraft producers and golf club manufacturers.
On Valentines Day, the prices of flowers and chocolate are usually high compared to other times. How do the principles of demand and supply describe the reasoning behind such price increases?
An industry is composed of 20 firms, all with equal sales. The Herfendahl Index ratio in this industry is a. 1000 b. 500 c. 800 d. This cannot be determined from the information given.
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