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Evaluate the view that the main goal of firms will always be profit maximization.
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- 34. Type of product: There are dozens of pasta producers that sell pasta to hundreds of Italian restaurants nationwide. The restaurant owners buy from the cheapest pasta producer they can. While pasta manufacturers must pay licensing fees to their local government and undergo regular food-safety inspections, anyone who passed inspections can acquire and maintain their license. * E (1 Point) Standardized (Identical) Differentiated Standardized (ldentical) ucers that sell pasta to hundreds of Italian buy from the cheapest pasta producer they can. 35. Unique11. Profit maximization using total cost and total revenue curves Suppose Edison runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is $25 per shirt. The following graph shows Edison's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for shirts quantities zero through seven (inclusive) that Edison produces. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 0 -25 Ho 0 ☐ 1 ☐ 2 ☐ ▬▬▬ 3 4 5 QUANTITY (Shirts) ■ 6 Total Cost 7 8 O Total Revenue Profit ?1. Suppose your current job pays you $300,000 a year. However, you are considering starting your own company. Based upon your research, you estimate your first year total revenue to be $7,500,000. There are however several costs of running the company during this first year, such as the cost of materials which will equal $2,750,000, employees who will receive in total $1,500,000, utilities which will cost $1,200,000, and rent that will be paid to the landlord that equals $1,800,000. Based on this information, solve for both your accounting profit and economic profit during this first year. Also, based upon these profit values, state whether you are better off starting this company or staying in your current job.
- Starbucks Canada to Open 150 New Outlets, Biggest Expansion Ever Financial Post February 8, 2013 Thanks in part to Target, Starbucks Canada will be undertaking the biggest expansion effort in its history this year, with plans to open more than 150 new locations across the country. … The subsidiary of Seattle-based Starbucks Corp. will open outlets inside many of the 124 Target locations opening in Canada in 2013 beginning next month — but the exact number is still a secret, Starbucks Canada president Annie Young-Scrivner said Friday. The growth is also a response to [the] company’s successful bid to tap into the Canadian palate with its burgeoning Blonde roast coffee in a way that it had not before, bringing a host of new customers through its doors, she said in an interview on Friday. … After the first nine months, Blonde grew to represent 12% of Starbucks Canada brewed coffee sales. Since the company began a sampling and marketing push last month in Canada, the lighter blend now…28. Type of product: Dozens of companies produce plain white socks. Consumers regard plain white socks as identical and don't care about who sells them their socks. The technology for producing socks is widely known, and any reputable person who wanted to start a sock manufacturing business could obtain a loan from a bank to buy the necessary machinery. * (1 Point) Differentiated Differentiated Standardized (ldentical) plain white socks. Consumers regard plain white Ils them their socks. The technology for producing 29. Unique(MANAGERIAL ECONOMICS) Show algebraic solution please The accounting department head of MOOG Controls Phils. has asked his financial manager to provide a pro forma statement of the company's "value" under a variety of prospective expansion scenarios, with the assumption that the company's many divisions will always be a single entity. The company's manager is concerned because, despite the fact that the company's competitors are few, their yearly sales growth has topped 60% in each of the last five years. The accounting department head advised that the valuation estimates be based on the company's profits of Php5.2 billion (which have yet to be paid out to investors) and the average interest rate over the past 20 years (7 percent) in the following profit growth scenario: C. 0% annual growth rate of profits.
- 1(MANAGERIAL ECONOMICS) Show algebraic solution please The accounting department head of MOOG Controls Phils. has asked his financial manager to provide a pro forma statement of the company's "value" under a variety of prospective expansion scenarios, with the assumption that the company's many divisions will always be a single entity. The company's manager is concerned because, despite the fact that the company's competitors are few, their yearly sales growth has topped 60% in each of the last five years. The accounting department head advised that the valuation estimates be based on the company's profits of Php5.2 billion (which have yet to be paid out to investors) and the average interest rate over the past 20 years (7 percent) in the following profit growth scenario: B. 2.8% annual growth rate of profits.3. There are two profit maximising firms, Alpha Inc. and Beta Ltd. Both use labour, L and capital, K to produce their output, Q and they both employ workers at the minimum wage. Following a government review, the national minimum wage rises from W₁ to W₂. (a) Use an isoquant/isocost diagram to show how this will affect Alpha's optimal choice of inputs, assuming it wants to continue to produce the same output. (b) Following the increase in the wage rate, Alpha Inc. reduces the number of workers employed by significantly more than Beta Ltd. Construct the demand curve for labour for Alpha Inc. and explain how and why its shape will change if you graphed the same curve for Beta Ltd. There is a third firm in this market called Gamma plc. which also uses labour and capital to produce output, where w is the price of labour, r is the price of capital and Q is the output. Suppose that Gamma plc. is a price-taking firm and faces a cost function: 1 1 c(w,r,Q) = — w²r²Q² (c) By deriving an…
- (ALL OWNERSHIP GOES TO CENGAGE) The government is considering levying a tax of $120 per unit on suppliers of either pickleball paddles or metro cards. The supply curve for each of these two goods is identical, as you can see on each of the following graphs. The demand for pickleball paddles is shown by DP (on the first graph), and the demand for metro cards is shown by DM (on the second graph). Suppose the government taxes pickleball paddles. The following graph shows the annual supply and demand for this good. It also shows the supply curve (S+Tax) shifted up by the amount of the proposed tax ($120 per paddle). On the following graph, use the green rectangle (triangle symbols) to shade the area that represents tax revenue for pickleball paddles. Then use the black triangle (plus symbols) to shade the area that represents the deadweight loss associated with the tax. (image is below) Instead, suppose the government taxes metro cards. The following graph shows the annual supply…98. Consider again the situation in problem 7 above. What difference would it make in Jean's calculations of economic and accounting profits if rather than having to find a studio, she owns a space that she could rent for $2,500 per month if she did not use it herself? a) Both accounting and economic profits would increase b) Economic profits would increase but accounting profits would remain unchanged c) Accounting profits would increase, but economic profit would remain unchanged d) Neither economic nor accounting profits would change.