b. The following are costs and revenues incurred by an ice cream company in short-run production. Fixed cost (month) : RM Rent 5 000 Interest on loan 1 200 Premium insurance 600 Variable cost (month) : Wages Maintenance 8 800 300 Utilities 2 200 Raw material 9 600 Transportation Owners salary before start producing own ice cream firm 2 000 54 000 Revenue (month): Price per one cone ice cream Operation days Average customer per day RM5 26 days 250 customers Based on the above information, calculate: i. Total revenue ii. Total cost iii. Economic profit From the answer to question (iii), what can you advise the ice cream maker?

b. The following are costs and revenues incurred by an ice cream company in short-run production. Fixed cost (month) : RM Rent 5 000 Interest on loan 1 200 Premium insurance 600 Variable cost (month) : Wages Maintenance 8 800 300 Utilities 2 200 Raw material 9 600 Transportation Owners salary before start producing own ice cream firm 2 000 54 000 Revenue (month): Price per one cone ice cream Operation days Average customer per day RM5 26 days 250 customers Based on the above information, calculate: i. Total revenue ii. Total cost iii. Economic profit From the answer to question (iii), what can you advise the ice cream maker?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The cost, in millions of dollars, of building a three-story high school in NewYork State was estimated to be:   2C x x x x      1.7 0.14 0.0001 20 400where x is the number of thousands of square feet. Suppose that you arecontemplating building a for-profit three-story high school and estimate thatyour total revenue will be $0.2 million dollars per thousand square feet.(a) What is minimum area for a three-story high school in New YorkState, that this model covers? (b) What is the variable cost of building a three-story high school in NewYork State? (c) What is the fixed cost of building a three-story high school in NewYork State? (d) Determine the profit function,P x( ), for building a three-story highschool in New York State? . (e) Determine,P(250) , for building a three-story high school in New YorkState, and interpret the result. (f) How many thousands of square feet should a three-story high schoolbuilding in New York State be in order to break even?
ЕОС 13.5B Morgan took $400 000 out of their savings account to start an ice cream stand. The savings account paid 5% interest. In the first year, Morgan sold 12,000 batches of ice cream at a price of $3 each, and incurred costs of $12,000 which involved outlays of money. What was Morgan's economic profit in the first year?
Bags/Participants Fixed Cost Variable Cost Total Cost 0 $1,700 $ - $1,700 100 $1,700 $500 $2,200 200 $1,700 $1,200 $2,900 300 $1,700 $2,700 $4,400 400 $1,700 $5,200 $6,900 500 $1,700 $9,000 $10,700 600 $1,700 $15,000 $16,700 700 $1,700 $23,800 $25,500 800 $1,700 $36,800 $38,500 900 $1,700 $55,800 $57,500 1,000 $1,700 $83,000 $84,700 Given the above information on cost, if you charge $15 per entry, what is the breakeven quantity of bags that you should order? At what quantity of bags will profits be maximized? A Use the profit maximizing rule, MR ≥ MC, buy 300 bags. B Use the profit maximizing rule, MR ≥ MC, buy 200 bags. C Use Qb = F/(MR-AVC) where Qb is the breakeven quantity to be determined, the optimal quantity of bags is 300. D Use Qb = F/(MR-AVC) where Qb is the breakeven quantity to be determined, the optimal quantity of bags is 200.
3.) Assume that the following has a linear cost function. Fixed Cost Marginal Cost per item Item Sells For $250 $17 $26 Find the following. (a) the cost function (b) the revenue function (c) the profit function (d) the profit on 97 items