ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question
Chapter 2, Problem 11P
To determine
(a)
The break-even point of the company.
Expert Solution
Answer to Problem 11P
300 residents in order to break-even.
Explanation of Solution
Given information:
Price charged by company = $6000/month
Operating expenses = $600,000 per month
Cost per person = $4000 per person per month
a).
Break-even point is the point at which total revenue earned by the company is just sufficient to cover its total cost of operation.
Calculation:
At break-even point,
Conclusion:
The Company needs to have 300 senior residents in order to just break-even.
To determine
(b)
The annual profit or loss of the company.
Expert Solution
Answer to Problem 11P
Annual profits = $1,200,000.
Explanation of Solution
Given information:
Calculation:
Conclusion:
Annual profits = $1,200,000.
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Please answer questions D-H, I have already answered A , B,C but it may help you to still solve them yourself. Thank you!
2. A firm’s production function is given by:Q = 10KLThe unit capital and labour costs are 2 and 1 pounds respectively. The firm is contracted to produce2000 units.(a) Write out the optimisation problem of the firm. (b) Express this problem using a Lagrangian function. (c) Find values of K and L which fulfil the contract with minimal cost to the firm. (d) Calculate the total cost to the firm.
3. Consider the following estimated regression equation, estimated using a sample of firms, where RDis total firm spending on research and development in USD ($), Revenue is total firm revenuein USD ($), and W ages is the firms’ total spending on wages in USD ($) (standard errors inparentheses):RDd = 1000(600)+ 0.5(0.1)Revenue + 1.5(0.5)W ages,(a) Interpret the coefficients on each of the explanatory variables. (b) Which of the three coefficients are statistically significant at the 5% level of significance? Howdo you know? A researcher runs a two-sided statistical test of the null hypothesis that both the coefficients onthe explanatory variables above are jointly equal to 0.25 (mathematically, that β1 = β2 = 0.25),and reports a p-value of 0.045.(c) What does this p-value mean for the outcome of the test? (d) What would an appropriate two-sided alternative hypothesis look like?
Chapter 2 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 2 - Prob. 1QTCCh. 2 - Prob. 2QTCCh. 2 - Prob. 3QTCCh. 2 - Prob. 4QTCCh. 2 - Prob. 1PCh. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6P
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