You are the principal economist at a firm that produces some output y based on the following function:y = f(x1, x2) = x ³ x ²1. Calculate the marginal product (MP) of both inputs at some arbitrary input bundle (x₁, x₂).Interpret the sign of both.2. Using your answer in the previous part, calculate OMPT₂/0x₁. Interpret what this means.3. Calculate the technical rate of substitution between ₁ and x2, i.e., MP/MP₂.4. Does this production function exhibit increasing, decreasing, or constant returns to scale? Show.15. Lay out a brief, realistic example of x₁, x2, y that fits the dynamics that you calculated.

The objective of the question is to understand the production function and its properties. The…

Answered: You are the principal economist at a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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4.A scatter graph is used to test the assumption that the relationship between cost and activitylevel is ________.A. CurvilinearB. CyclicalC. UnpredictableD. Linear
Consider a market with the following supply and demand. (It may help to draw a graph for these questions.) P 5 6 7 8 9 10 11 12 13 14 QS 200 300 400 500 600 700 800 900 1000 1100 QD 800 750 700 650 600 550 500 450 400 350 If there is an external cost of $3, what is the efficient quantity? 500 (already answer) If there is an external benefit of $3, what is the efficient quantity? 700 (already answer) For the remaining questions assume that there is a $3 external COST. If the government wants to get the efficient quantity with a per/unit tax, how much should the tax be? 3 (already answer) Now imagine that they use tradable allowances. If they cap the quantity at 400 what would the value of these allowance be in the market? (Assume the…
Which of the following is correct concerning reactions to INCREASES in activity? Variable Cost Per Unit A) B) C) D) Total Variable Cost Increase Constant Decrease Increase Decrease Decrease Constant Constant
7. Which of the following charts best represent total variable costs? For each chart, the line represents the cost behavior pattern, the vertical axis represents costs, and the horizontal axis represents total volume, (A) Your answer is (B) (C) (D) Explain your answer: 8. Which of the following is NOT a cost estimation method? A) High-low cost estimation B) Scatter diagrams C) Least-square regressions D) CVP analysis Your answer is Explain your answer: 9. Assume a local Cost Cutters provides cuts, perms, and hairstyling services. Annual fixed costs are $120,000, and variable costs are 40 percent of sales revenue. Determine its break-even point in sales dollars. A) $250,000 B) $200,000 c) $240,000 D) $360,000 Your answer is Explain your answer:
If Promus could make order amounts after realizing demand, what would the expected value of this information be? Use the simulation results to calculate the mean profit of this case to compare with the mean profit of the non-perfect information case. You will need to enter a formula for Sales.
5
Which of the following assumptions of the CVP graph is not true? Multiple Choice Costs are linear. Total fixed expenses are constant within the relevant range. Variable costs go down as volume goes up. The selling prices do not change. Volume is the only factor affecting total cost.
2. The variable cost per unit of activity increases as activity increases.⦁ True⦁ False
A factory is producing a new product, and it is your job to help decide what price will produce maximum for your company. Your accounting department has told you that the profit can be estimated by the formula P(x)= 16=6x^2-x^3, where x is the selling price. Determine the selling price that produces the maximum profit. A.) Find the critical values. B.) Determine the selling price.
When the level of activity increases, total fixed costs a. decrease. b. remain the same. c. increase. d. change, but the direction depends on the specific situation.
Within the relevant range: Select one: O A. variable cost per unit decreases as production decreases. O B. fixed cost per unit increases as production decreases. O C. fixed cost per unit decreases as production decreases. O D. variable cost per unit increases as production decreases.
Which of the following statements about CVP analysis is false? a. The CVP analysis assumes that total variable costs remain the same over a relevant range. O b. Total revenues and total costs are linear in relation to output units. OC. All of the given answers are true. O d. Unit selling price, unit variable costs, and total fixed costs are known and remain constant. O e. Operating income calculations in CVP analysis are based on contribution margin not gross margin.

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