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homework assignments on Cengage

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Answered Same Day Dec 19, 2021

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Komalavalli answered on Dec 19 2021
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HW Chapter 8:
1. Problems with team production : Ans: The principal agent problem
2. Firm structure :
a)Which type of business accounts for the majority of sales revenue in the United States? Ans: Corporation
)Business structures in which ownership and management are separate, as with corporations, are subject to principal–agent problems. Which of the following may help reduce such problems and promote cost efficiency?  Check all that apply.: Ans: Profit-sharing agreements with managers and Loyal customers who will buy the firm’s products unconditionally
3. Gilberto lives in Philadelphia and runs a business that sells boats. In an average year, he receives $726,000 from selling boats. Of this sales revenue, he must pay the manufacturer a wholesale cost of $426,000; he also pays wages and utility bills totaling $264,000. He owns his showroom; if he chooses to rent it out, he will receive $13,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Gilberto does not operate this boat business, he can work as a paralegal, receive an annual salary of $22,000 with no additional monetary costs, and rent out his showroom at the $13,000 per year rate. No other costs are incu
ed in running this boat business.
Explicit cost are those cost that firms pay outsiders for their services and goods.It is a actual amount that spent by a firm on buying or hiring of factor inputs and non factor inputs
a) The wages and utility bills that Gilberto pays = Explicit cost
) The wholesale cost for the boats that Gilberto pays the manufacturer = Explicit cost
Implicit costs are the cost of self employed or self owned resources
c) The salary Gilberto could earn if he worked as a paralegal = Implicit cost
d) The rental income Gilberto could receive if he chose to rent out his showroom =Implicit cost
e ) Accounting profit = 726000-690,000 =$36,000
Accounting profit = Total Revenue –Explicit cost
Total Revenue = $726000
Explicit cost = $426,000 + $264,000 = $690,000
f) Economic profit = 726000-725,000=$1,000
Economic profit = Total Revenue –Total cost
Total Revenue = $726000
Total cost= Explicit cost +Implicit cost
= $690,000+($22,000+$13,000)
= $690,000+$35,000 = 725,000
4)
    Game
    Game result
    Total
    Game free throw percentage
    Average free throw percentage
    1
     4/5
     4/5
    80%
    80%
    2
     2/5
     3/5
    40%
    60%
    3
     1/4
     1/2
    25%
    50%
    4
     1/2
     1/2
    50%
    50%
    5
    1
     3/5
    100%
    60%
You can think of the result in any one game as being Susan’s marginal free-throw percentage. Based on your previous answer, you can deduce that when Susan’s marginal free-throw percentage is below the average, the average must be falling
For a U-shaped average total cost (ATC) curve, when the marginal cost curve is below the average total cost curve, the average total cost must be falling . Also, when the marginal cost curve is above the average total cost curve, the average total cost must be rising . Therefore, the marginal cost curve intersects the average total cost curveat its minimum .
5)
    Quantity
    TC
    MC
    FC
    VC
    AVC
    ATC
    0
    120
    ---
    120
    ---
    ---
    ---
    1
    200
    80
    120
    80
    80
    200
    2
    240
    40
    120
    120
    60
    120
    3
    285
    56
    120
    165
    55
    95
    4
    340
    66
    120
    220
    55
    85
    5
    425
    85
    120
    305
    61
    85
    6
    540
    115
    120
    420
    70
    90
6)
    Workers
    Total
    Average
    Marginal
    0
    0
    Â 
    Â 
    1
    12
    12
    12
    2
    28
    14
    16
    3
    42
    14
    14
    4
    52
    13
    10
    5
    55
    11
    3
Marginal product (MP) and average product (AP) curves always intersect at the Maximum of the AP curve.
7.) Suppose Ike’s Bikes is cu
ently producing 100 bikes per month in its only factory. Its short-run average total cost is $ 440 per bike.
Suppose Ike’s Bikes is expecting to produce 100 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using One Factories .
    
    
    
    SATC
    
    
    
    Â 
    Q = 100
    Q = 200
    Q = 300
    Q = 400
    Q = 500
    Q = 600
    1
    440
    280
    240
    320
    480
    800
    2
    620
    380
    240
    240
    380
    620
    3
    800
    480
    320
    240
    280
    440
    LATC
    Â 
    Â 
    Â 
    Â 
    Â 
    Q=100
    Q = 200
    Q = 300
    Q = 400
    Q = 500
    Q = 600
    440
    280
    240
    240
    280
    440
    Range
    Economies of Scale
    Constant Returns to Scale
    Diseconomies of...
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