What happens to the peter''s effort

Assignment Help Microeconomics

Reference no: EM13766826

1. A company uses two variable inputs, labor (L) and materials (M), to produce its output. At the company's current level of output:

CL = $10 / unit MPL = 25

CM = $2 / unit MPM = 4

a) Determine whether the firm is operating efficiently, given that its objective is to minimize the cost of producing the given the level of output
b) Determine what changes (if any) in the relative proportions of labor and materials are needed to operate efficiently
2. Peter Higgins is a sales agent for XZY Company. He has an effort cost function of C = e2 and a reservation wage of $1,500. His wage package is W = 1,500 + 0.2Q where the CEO sets the incentive at 0.2 and Q = 200e. Q is the output. If the CEO increases the incentive from 0.2 to 0.25, what happens to the Peter's effort? Will profits rise or fall?
3. Two consumers Justin and Cindy of the same product have the following demand curves: Q1 = 500 - 10 P and Q2 = 500 - 20 P. The marginal cost (MC) for the firm is $10. Calculate the prices when the firm discriminates between the two consumers. Is this a good strategy, or should the firm charge the same price to both of them?
4. Some years ago, conservation groups paid cattlemen in the Western United States to move their herds away from wild buffalo herds so that the buffalo would have more feed and would not have to compete with the cattle. What is the relevance of the Coase Theorem in this case?

Reference no: EM13766826

Questions Cloud

California recently considered passing a tax on doctors : The state of California recently considered passing a tax on doctors for their services in that state in order to raise revenue to pay for universal health coverage for California residents. Suppose the average open heart surgery costs $100,000, and ..

What must the beta be for the other stock in your portfolio : You own a portfolio equally invested in a risk-free asset and two stocks. One of the stocks has a beta of 1.47 and the total portfolio is equally as risky as the market. What must the beta be for the other stock in your portfolio?

Create a portfolio with an expected return : You have $208 thousand to invest in a stock portfolio. Your choices are Stock H, with an expected return of 14.05 percent, and Stock L, with an expected return of 10.22 percent. If your goal is to create a portfolio with an expected return of 12.99 p..

Current assembly system-vibration isolation platforms : A small company that manufactures vibration isolation platforms is trying to decide whether it should upgrade the current assembly system (System D), which is rather labor-intensive, with one that is more highly automated (System C). Some components ..

What happens to the peter''s effort : Peter Higgins is a sales agent for XZY Company. He has an effort cost function of C = e2 and a reservation wage of $1,500. His wage package is W = 1,500 + 0.2Q where the CEO sets the incentive at 0.2 and Q = 200e. Q is the output. If the CEO increase..

Explain how the utility maximizing mrtp : In a perfectly competitive market, some people have a positive marginal rate of time preference (MRTP), and others have a negative MRTP. Define MRTP (positive and negative) and explain how the utility maximizing MRTP will be determined in this perfe..

Nominal interest rates according to the fisher effect : If expected inflation declines by 2%, what should happen to nominal interest rates according to the Fisher effect? (Points : 1)rise by 2%fall by 2%be cut in halfdouble in size

Particular industry was severely hurt by predatory dumping : Is there a particular case that you can think of from your research for this course that a particular industry was severely hurt by predatory dumping practices? What would you have done to protect this industry? Do you think you would be effective?

Explain what terms of trade mean and apply : Please explain what terms of trade mean and apply it to a certain situation for trade in computers between China and the United States. Your response should be at least 75 words in length. You are required to use at least your textbook as source mat..

User Account

All Pages