Economics of Enterprise Answers

The table shows the inputs of two factors of production, capital and labour, needed to produce varying levels of output.

Output Capital Labour

100 5 10

200 8 16

300 14 28

400 20 40

500 26 52

Over which output range do increasing returns to scale occur.?

The table shows a firm’s marginal costs

Output Marginal cost ($)

1 40

2 30

3 20

4 30

5 40

If the Average Fixed Cost of producing 5 units is $6, calculate the total cost of producing 5 units.

Explain what causes a perfectly competitive firm to suffer losses.

The schedule shows the short run marginal costs of producing good X.

Units of X Marginal cost ($)

1 40

2 30

3 30

4 60

5 120

Given that the total fixed cost is $20, calculate the level of output which minimises Average Total Cost (ATC).

A firm in perfect competition currently sells 100 units at $5 each. What will be the revenue obtained by the firm if it increases its price to $6?

A firm has a total production cost of $200,000. Its average fixed cost is $120 and its average variable

cost is $80. Calculate the firm’s total fixed costs.

Hello, in a multiple regression about customer survey on their Dell computer systems, I id'd 3 iv's of stat.signf. Variable 1 is about «competitive computer pricing>, variable 2 «high quality computer peripherals» and variable 3 «program processing speed of their computer». Now what I'd like to know is HOW to make sense of the fact that higher scores on all of the 3 signf. Variables result in LOWER scores on the overall satisfaction levels. Wouldn't f.ex. a competitive price result in higher overall satisfaction? How to make sense of apparent negative correlation between the 3 variables and overall satisfaction?

Anuradha Sharma, a start up entrepreneur from Bareilly, has invested Rs 80 lacs in an apparel retail store. Business has been good, and the store shows an accounting profit of Rs 10 lacs for the last year. This profit is after taxes and after payment of a Rs 20 lacs salary to Ms. Sharma. This salary is less than what she could make at another job, which is about equal to Rs 40 lacs. Considering the risk involved in the fashion retail business post Covid’19, she believes that a 15 percent after-tax rate of return is appropriate for this type of investment. (20 marks)

a. b. Given this information, calculate the economic profit earned by Ms Sharma. What accounting profit would the firm have to earn in order for the firm to break even in term of economic profit?

Anuradha Sharma, a start up entrepreneur from Bareilly, has invested Rs 80 lacs in an apparel retail

store. Business has been good, and the store shows an accounting profit of Rs 10 lacs for the last year.

This profit is after taxes and after payment of a Rs 20 lacs salary to Ms. Sharma. This salary is less than

what she could make at another job, which is about equal to Rs 40 lacs. Considering the risk involved in

the fashion retail business post Covid’19, she believes that a 15 percent after-tax rate of return is

appropriate for this type of investment. (20 marks)

a. Given this information, calculate the economic profit earned by Ms Sharma.

b. What accounting profit would the firm have to earn in order for the firm to break even in term

of economic profit?

When the market mechanism is allowed to operate freely, prices will determine…