Managerial Economics Chapter 5 and 6 Homework Essay

Part A: A firm maximizes profit when it equates MRPL = (MR) *(MPL) = MCL MPL= dQ/dL =1 – L/400 Therefore (40)*(1-L/400) = 20. The solution is L = 200. In turn, Q = 200 – (2002/800). The solution is Q = 150. The firms profit is= PQ – (MC)L= ($40) (150) – ($20) (200) = $2,000 Part B Price increase to $50: Q = Dresses per week L= Number of labor hours per week Q = L –L2/800 MCL=$20 P= $50 A firm maximizes profit when it equates MRPL = (MR) *(MPL) = MCL MPL= dQ/dL =1 – L/400 Therefore (50)*(1-L/400) = 20. The solution is L = 240. In turn, Q = 240 – (2402/800). The solution is Q = 168. The firms profit is ($40) (168) – ($20) (240) = $1,920 Optimal output of the firm would increase from 150 to 168, and labor would increase from 200 to 240, resulting in a decrease in profit to $1,920. Part B inflation in labor and output price: Assuming a 10% increase IN LABOR COST AND OUTPUT PRICE†¦ Q = Dresses per week L= Number of labor hours per week Q = L –L2/800 MCL=$20.20 (20*.10) P= $40.40 ($40*.10) A firm maximizes profit when it equates MRPL = (MR) *(MPL) = MCL MPL= dQ/dL =1 – L/400 Therefore (40.40)*(1-L/400) = 20.20. The solution is L = 200. In turn, Q = 200 – (2002/800). The solution is Q = 150. The firms profit is ($40.40) (150) – ($20.20) (200) = $2,020 Optimal output of the firm would remain the same at 150, and labor would remain the same at 200, however, there would be an increase in profit to $2,020 to correspond to the percentage increase in output price and labor cost (in this example 10%). Part C 25% increase in MPL: The marginal cost of labor would increase by the same percentage amount as price (25%), therefore the Marginal Cost of labor would increase from 20 to 25. Therefore 50 – L/8 =25 and L=200 Output and hours of labor remain unchanged due to the fact that price and cost of labor increase by same percentage amounts ALSO SEE PART B ABOVE INFLATION EXAMPLE I MADE DENOTING 10 PERCENT INCREASE IN LABOR AND OUTPUT. Chapter 5 Question 12 Page 220 Part A: Q = 100(1.01).5(1).4 = 100.50. Compare this to the original of Q=100 and we can determine that Output increases by .5%. The power coefficient measures the elasticity of the output with respect to the input. A 1% increase in labor produces a (.5)(1) = .5% increase in output. Part B: Dr. Ghosh- per my e-mail I was a bit confused with this question based on your lecture notes (as your notes state that BOTH inputs must change for a returns to scale to be determined) , so I have two different opinions. Opinion 1- The nature of returns to scale in production depends on the sum of the exponents, ÃŽ ±+ÃŽ ². Decreasing returns exist if ÃŽ ±+ÃŽ ²Ã‹â€š 1. The sum of the power coefficients is .5 + .4 < 1, the production function exhibits decreasing returns to scale where output increases in a smaller proportion than input. This is reflected in Part A of this problem where a 1% increase in labor (input) results in a .5% increase in output. Opinion 2- BOTH inputs must be changed in the same proportion (according to your lecture notes). Therefore, in this question I am confused. Only one of the inputs are being changed. Does this concept not apply, and is my original answer incorrect? I don’t see any scale where only one of the inputs are changed†¦As such, if both inputs MUST be changed then returns to scale can not be determined for this question as only L was originally changed. Chapter 6 Question 6 Part B Page 265 (part A not required) Demand is P = 48 – Q/200 Costs are C = 60,000 + .0025Q2. Therefore the TR= 48Q-Q2/200, and the derivative MR function would be MR = 48 – Q/100. The firm maximizes profit by setting MR = MC. Therefore, MR = 48 – Q/100 and MC = .005Q. Setting MR = MC (48 – Q/100) = .005Q results in: Q* = 3,200. In turn, P* = $32 (where 48-3200/200). Chapter 6 Question 8 Page 265 CE= 250,000 +1,000Q + 5Q2 $2,000= Cost of Frames and assembly P= 10,000-30Q Part A: Marginal Cost of producing an additional engine†¦ CE = 250,000 +1,000Q +5Q2 MCE = d/dQ (250,000 +1,000Q + 5Q2) =10Q + 1,000 MCCycle=MCEngine +MCframes and assembly; therefore MCCylce = 1,000+ 2,000 +10Q The inverse demand function provided in the text was P= 10,000-30Q TR = (P)*(Q) = (10,000-30Q)*Q =10,000Q – 30Q2 Obtain the derivative of this function to find MR: MR=d/dQ =(10,000Q – 30Q2) MR=10,000 – 60Q MR = MC 10,000 – 60Q = 1,000 + 2,000 +10Q 7,000 = 70Q Q=100 (profit maximizing output) P= 10,000 – 30Q =10,000 -30(100) Profit Maximizing Price=7,000 Therefore the Marginal Cost of producing an engine =1,000 + 10Q (q=100 from solving above) =2,000 MCEngine Marginal Cost of Producing a Cycle From equation developed above†¦ MCCycle = 1,000 +2,000 +10Q =1,000 +2,000 + 10(100) =$4,000 MCCycle Part B: Since the firm can produce engines at a Marginal Cost of $2,000, the opportunity to buy from another firm at a greatly reduced Marginal Cost of $1,400 would be sensible. MCEngine=$1,400 MR = MC 10,000 – 60Q = 2,000 +1,400 10,000- 60Q = 3400 Q=110 (profit maximizing output) P = 10,000 – 30(110) =6,700 profit maximizing price Therefore the firm should buy the engine since the engine produced by the firm is more than the engine provided by the other firm. Chapter 6 Question 10 Page 266 Part A: Revenue is P*Q. Obtain Marginal Cost function through 160 + 16Q + 0.1Q2 FOC (derivative of above equation) 16 + 0.2Q= MC From the P= 96 – .4Q we can determine that total revenue = 96Q – .4Q2 and the derivative or FOC is thus 96 – .8Q= MR Set MC = MR 16 + 0.2Q = 96 – 0.8Q Q=80 We solve for P by plugging this into our original equation P= 96-.4(80) P=64 Profit = 5,120 (80*64) – 2,080 (160 + 16*80 + .1(80)2) = $3,040 Part B: C =160 + 16Q + .1Q2 AC= (160+16Q+.1Q^2)/Q MC=d/dQ(160 + 16Q + .1Q2) MC=16 + .2Q AC=MC 160/Q + 16 + .1Q = 16 + .2Q 160/Q = .1Q .1Q2 =160 Q= 40 Average cost of production is minimized at 40 units, she is correct as AC = MC (see below). AC = 960/40 =24 MC = 16 + (.2) ($40) = $24 However, optimal output is Q=80 where MR = MC, therefore her second claim of 40 units as the firm’s profit maximizing level of output is incorrect. P = 96 – .4 (40) P=$80 TR = 80*40 =3,200 C = 160 + 16Q + .1Q2 =960 Profit = Revenue – Cost = 3,200 – 960 = 2,240 therefore output at 80 is greater than the profit at 40. Part C: We learned from part a the single plant cost is $2,080 or (160 + 16*80 + .1(80)2). If two plants were open each producing the minimum level of output detailed in part B (Q=40) then total cost would be (Q)*(AC) = 24*80 = $1,920. You can compare this to the cost in part A of $2,080 and determine it is cheaper to produce using the two plants.

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Through representation of poverty in particular ways, NGOs have been Essay

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2 Minute Monologue Essay Example | Topics and Well Written Essays - 500 words

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The impacts of motivation on works and staff,which encourage employees Dissertation

The impacts of motivation on works and staff,which encourage employees to work in Saudi private sector - Dissertation Example SABIC controls over 10% of the international petrochemical market (30). It has entered into joint ventures and partnerships with foreign organizations like Shell, ExxonMobil and numerous other American, European and Asian companies (Cordesman, 2006). SABIC is a true reflection of the intention of the government of Saudi Arabia to involve private sector investment and participoation in the growth and development of the nation. As such, 70% of SABIC is owned by the government while the remaining 30% distributed among private owners (SABIC, 2011). The government further plans to divest the various company holdings and accelerate the privatization process. In the light of the Saudi Arabia’s policy to encourage Saudization or to ensure that the private sector organizations employ a substantial number of local employees (), it is essential to study the factors that help in attracting recruitment and which keep the local employees motivated and loyal to the company. While the Saudiza tion program was initiated as early as 2006, with the objective of increasing the private sector local workforce to 30%, the current statistics reveal that the actual fraction of local employees in private sector is less than 10%. ... mean that there is a low level of motivation among the local employees either to get selected in the private sector, or to work in such an organization. This is very little research undertaken within the private sector to understand why the sector lacks in local participation, or what makes it attractive to the expatriates and not the local workforce alone Al-Eisa, Furayyan, & Alhmeoud, 2009). However, this is a major issue that the government of Saudi Arabia is facing, and hence there is a need to study the problem intricately so as to S SABIC provides a dynamic environment where the changes that facilitate privatization are visible as can be seen in the recent changes to its human resource policies and packages. The organization employes a vast majority of both local and foreign workers and has been tasked with keeping the workforce trained and qualified as well as motivated to work. A research into the policies, practices and Human resource strategies in SABIC are expected to prov ide insights about how organizations in Saudi Arabia, especially, the private oraganizations, can motivate and retain their employees. Research Objectives In the light of the above background, the following research objectives are found useful for the current research: -To examine the factors that affect employees and staff motivation in Saudi Arabian firms - To define the role of motivation in achieving job satisfaction in Saudi Arabian petrochemical organizations. -To find out whether employee motivation is related to higher performance and low employee turnover in the context of Saudi Arabia Research Methods The research is conducted using both primary and secondary methods. The secondary method consists of an exhaustive literature survey and review where topics like employee motivation