You estimate that your cattle farm will generate $1 million of profits on sales of $5.4 million under normal economic conditions and that the degree of operating leverage is 8. What will profits be if sales turn out to be $4.7 million? Note: Negative amount should be indicated by a minus sign. Round your answer to 1 decimal place. What if they are $6.1 million? Note: Round your answer to 1 decimal place.
Q: Calculate Ana's marginal revenue and marginal cost for the first seven teddy bears she produces, and…
A: The total cost incurred by a firm operating in a market includes fixed costs and variable costs.…
Q: two bidders, i = 1, 2 -the good on sale has value vi for bidder i -bidders’ valuations v1, v2 are…
A: In economics, a linear equilibrium is a state in which all agents in a market or game choose their…
Q: Make graph for demand curve of: 1. When good x is normal and y is bad. 2. When good one good is…
A: A normal good is one whose consumption level increases with the rise in income. It means that the…
Q: Complete the first row of the table to reflect the state of the markets in Mexico. Real Interest…
A: The interest rate that an investor, saver, or lender receives after taking inflation into account is…
Q: Explicitly show the effects of each of the following changes on the price and quantity exchanged in…
A: The law of demand signifies the negative relationship between the price and quantity demanded.…
Q: Firm O a. $69 Ob. $97 O c. $81 O d. $83. A B C D Marginal Cost to Eliminate (Dollars) First Unit…
A: Marginal cost is the additional cost incurred by the firms with every additional unit of pollution.…
Q: The following graph shows the demand (marginal private benefits) and supply (marginal private costs)…
A: Positive externality in production occurs when the production of a good or service generates…
Q: Price 65 60 55 50 45 40 35 30 25 20 15 10 5 CUT 0 0 50 100 Type your answers in all of the blanks…
A: The demand curve is represented by curve D1 and the supply curve before tax is represented by curve…
Q: A well-implemented environmental policy should Question 1Answer a. provide opportunities for…
A: A well-implemented environmental policy is a set of guidelines and regulations that are effectively…
Q: The indifference curve for Jim, who enjoys muffins and croissants, is illustrated below. Jim is…
A: The indifference curve is a graphical representation of all the bundles of two goods that can be…
Q: Shown is the capital account for 2018 for the fictional country of Balancia. Given these entries,…
A: BOP is a record of a nation's transactions with the rest of the world, Theoretically, BOP account is…
Q: Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price…
A: Marginal revenue is a central concept in microeconomics that describes the additional total revenue…
Q: U.S. electronics manufacturer is considering moving its production abroad. Suppose its production…
A: A production function shows the connections between inputs (such as labor and capital) and the…
Q: "Water is one thing we all have in common. Water issues are a common thread through most of the…
A: The type of market failure being discussed in the article is negative externality. Negative…
Q: What is the tariff rate (in cents per kg) charged by U.S. on live buffalo originating in each of the…
A: A tariff is a tax imposed on goods and services that are imported into a country from another…
Q: In the figure above the firm is suffering negative economic profit. the firm is operating in a…
A: A monopoly is a market structure in which a single seller controls the entire supply of a particular…
Q: Refer to the figure above, which indicate a perfectly competitive industry. If the p equal to $60,…
A: The perfect competition refers to a market where a large number of buyers and sellers exist. Demand…
Q: 1. Consider a consumer with the utility function u(x, y) = 2x¹/2 + y, an income of I = Rs100, and…
A: A utility function is a concept in economics that represents an individual's preferences or…
Q: In this diagram, when this monopolist chooses the price and quantity which maximizes profit: 17.10-…
A: A monopoly is a market structure in which there is only one seller in the market. As there is a…
Q: The Asia Corporation manufactures compressors for commercial airconditioning systems. A new…
A: Present value (PV) represents the current worth of a future sum of money or stream of cash flows…
Q: Janeek and Raj are the only two growers who provide organically grown com to a local grocery store.…
A: Nash equilibrium is the outcome of a game in which all players get their desired payoff by selecting…
Q: After finding the optimal quantities of X1, X2 that maximize the function Z = (X1^0.2)*(X2^(1-0.2)),…
A: In the context of optimization problems, the term "optimal quantities" refers to the specific values…
Q: A policy that increases saving a. will worsen economic growth, but improve health outcomes. b. will…
A: Economic growth basically refers to the expansion in the production of goods and service in an…
Q: (Cost of debt) Sincere Stationery Corporation needs to raise $531,000 to improve its manufacturing…
A: Markеt valuе, also known as markеt capitalization in thе contеxt of stocks, is thе total valuе of a…
Q: The figure illustrates the average total cost (ATC) and marginal cost (MC) curves for an orange…
A: Perfect competition is a type of market structure in which there are large number of buyers and…
Q: Suppose the US economy enters a recession. During the recession, inflation falls and interest rates…
A: This can be defined as a situation in an economy in which all the economic activity starts…
Q: FM and Fp indicate the free time enjoyed by Maaike and Pim, respectively, and G is t hey put into…
A: The welfare of a society depends, upon the satisfaction levels of all its consumers. If there is a…
Q: 1. Tom International LLC has developed pessimistic, most likely, and optimis benefit data are given…
A: The Net present worth or NPW is defined as the the set or series of cash flow happening at different…
Q: Suppose the economy is in a long-run equilibrium, as shown in the following graph. Now suppose that…
A: Aggregate demand curve shows the inverse relationship between price level and real GDP. AD curve is…
Q: What steps can an individual take to become active in shaping economic legislation or policies that…
A: The healthcare industry is a complex and ever-evolving landscape, and its trajectory is…
Q: A) Describe the assumptions of personnel economics. How are these assumptions unique compared to…
A: A specialist area of research called personnel economics uses economic theories to analyze labor…
Q: Why did the banana market industry collapse in St. Vincent and the Grenadines?
A: In the past, St. Vincent and the Grenadines' banana industry was an important part of the national…
Q: 2. Offshoring Diagrams using High Skill and Low Skilled labor Consider the US financial industry.…
A: Labor market equilibrium is a state in which the quantity of labor supplied by workers equals the…
Q: Suppose that the world is populated entirely with rational but amoral individuals that only get…
A: In economics, utility is often used to represent the preferences of individuals or households. For…
Q: 6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of…
A: According to the sticky wage theory, changes in organisation performance or the state of the economy…
Q: Critically analyse government programmes in addressing poverty in south afric
A: This can be defined as a situation In which the person is actively finding a job and has have…
Q: Suppose that the reserve requirement for chequing deposits is 15 % and the banks do not hold any…
A: The Reserve Ratio refers to the percentage of deposits a bank must keep in the bank for liquidity…
Q: 7. Should consumers pay the premium to ensure high quality, or pay the minimum price and get the…
A: The decision to pay a premium for high-quality products or to pay the minimum price for minimum…
Q: Suppose the market demand for milk is Qd = 150 - 5P. Additionally, suppose that a dairy's variable…
A: The quantity demanded equation is given as follows. The variable cost is given as The marginal cost…
Q: Suppose the current inflation rate is a constant 7% and the central bank implements a disinflation…
A: Disinflation policy is the policy by the government of the nation and central bank to reduce the…
Q: Consider the market for blueberries (a homogeneous product) in Madagascar, which is con- sidered a…
A: The market for homogenous product refers to a market situation in which all the goods and services…
Q: Français OA) $100,000.00 B) $125,000.00 OC) $80,000.00 OD) $60,000.00 Font Size: A dwelling valued…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: The initial condition of the banking system is as follows: $500 billion in reserve, $4,500 billion…
A: Banking institutions allow fiscal transactions by offering services such as deposits and loans,…
Q: Figure 4 Forks (thousands) 70 58 46 20 0 A ID B E 44 60 C 190 80 Spoons (thousands)
A: Opportunity cost is value of next best alternative use of resources. In our context, opportunity…
Q: A monopolist with demand curve P=40-Q has costs C=0.5Q2 and MC=Q. Calculate the profits if this firm…
A: Demand curve faced by monopoly: P = 40-QCost curve equation: Marginal cost: In a two-part tariff…
Q: A bank in Mississauga has a buying rate of ¥1 = C$0.01231. If the exchange rate is ¥1 = C$0.01261,…
A: Buying rate of ¥1 = C$0.01231Exchange rate of ¥1 = C$0.01261 The price of one currency expressed in…
Q: Question 1 (40 points) Consider a homogeneous duopoly market where two firms compete in prices.…
A: The objective of the question is to determine if there is an equilibrium in pure strategies for a…
Q: Using the graph answer the following questions: A: At the profit maximizing level of output, what is…
A: Perfect competition is a type of market where there are very large number of firms,which have no…
Q: Please type answers
A: The objective of the question is to calculate the Consumer Price Index (CPI) for the subsequent…
Q: Assuming that the monopolistic competitor faces the demand and costs depicted below and finds the…
A: In a monopolistic situation, equilibrium happens at the point where marginal cost equates to the…
You estimate that your cattle farm will generate $1 million of profits on sales of $5.4 million under normal economic conditions and that the degree of operating leverage is 8.
What will profits be if sales turn out to be $4.7 million?
Note: Negative amount should be indicated by a minus sign. Round your answer to 1 decimal place.
What if they are $6.1 million?
Note: Round your answer to 1 decimal place.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
- It costs a pharmaceutical company 75,000 to produce a 1000-pound batch of a drug. The average yield from a batch is unknown but the best case is 90% yield (that is, 900 pounds of good drug will be produced), the most likely case is 85% yield, and the worst case is 70% yield. The annual demand for the drug is unknown, with the best case being 20,000 pounds, the most likely case 17,500 pounds, and the worst case 10,000 pounds. The drug sells for 125 per pound and leftover amounts of the drug can be sold for 30 per pound. To maximize annual expected profit, how many batches of the drug should the company produce? You can assume that it will produce the batches only once, before demand for the drug is known.If a monopolist produces q units, she can charge 400 4q dollars per unit. The variable cost is 60 per unit. a. How can the monopolist maximize her profit? b. If the monopolist must pay a sales tax of 5% of the selling price per unit, will she increase or decrease production (relative to the situation with no sales tax)? c. Continuing part b, use SolverTable to see how a change in the sales tax affects the optimal solution. Let the sales tax vary from 0% to 8% in increments of 0.5%.Software development is an inherently risky and uncertain process. For example, there are many examples of software that couldnt be finished by the scheduled release datebugs still remained and features werent ready. (Many people believe this was the case with Office 2007.) How might you simulate the development of a software product? What random inputs would be required? Which outputs would be of interest? Which measures of the probability distributions of these outputs would be most important?
- You now have 10,000, all of which is invested in a sports team. Each year there is a 60% chance that the value of the team will increase by 60% and a 40% chance that the value of the team will decrease by 60%. Estimate the mean and median value of your investment after 50 years. Explain the large difference between the estimated mean and median.Play Things is developing a new Lady Gaga doll. The company has made the following assumptions: The doll will sell for a random number of years from 1 to 10. Each of these 10 possibilities is equally likely. At the beginning of year 1, the potential market for the doll is two million. The potential market grows by an average of 4% per year. The company is 95% sure that the growth in the potential market during any year will be between 2.5% and 5.5%. It uses a normal distribution to model this. The company believes its share of the potential market during year 1 will be at worst 30%, most likely 50%, and at best 60%. It uses a triangular distribution to model this. The variable cost of producing a doll during year 1 has a triangular distribution with parameters 15, 17, and 20. The current selling price is 45. Each year, the variable cost of producing the doll will increase by an amount that is triangularly distributed with parameters 2.5%, 3%, and 3.5%. You can assume that once this change is generated, it will be the same for each year. You can also assume that the company will change its selling price by the same percentage each year. The fixed cost of developing the doll (which is incurred right away, at time 0) has a triangular distribution with parameters 5 million, 7.5 million, and 12 million. Right now there is one competitor in the market. During each year that begins with four or fewer competitors, there is a 25% chance that a new competitor will enter the market. Year t sales (for t 1) are determined as follows. Suppose that at the end of year t 1, n competitors are present (including Play Things). Then during year t, a fraction 0.9 0.1n of the company's loyal customers (last year's purchasers) will buy a doll from Play Things this year, and a fraction 0.2 0.04n of customers currently in the market ho did not purchase a doll last year will purchase a doll from Play Things this year. Adding these two provides the mean sales for this year. Then the actual sales this year is normally distributed with this mean and standard deviation equal to 7.5% of the mean. a. Use @RISK to estimate the expected NPV of this project. b. Use the percentiles in @ RISKs output to find an interval such that you are 95% certain that the companys actual NPV will be within this interval.The IRR is the discount rate r that makes a project have an NPV of 0. You can find IRR in Excel with the built-in IRR function, using the syntax =IRR(range of cash flows). However, it can be tricky. In fact, if the IRR is not near 10%, this function might not find an answer, and you would get an error message. Then you must try the syntax =IRR(range of cash flows, guess), where guess" is your best guess for the IRR. It is best to try a range of guesses (say, 90% to 100%). Find the IRR of the project described in Problem 34. 34. Consider a project with the following cash flows: year 1, 400; year 2, 200; year 3, 600; year 4, 900; year 5, 1000; year 6, 250; year 7, 230. Assume a discount rate of 15% per year. a. Find the projects NPV if cash flows occur at the ends of the respective years. b. Find the projects NPV if cash flows occur at the beginnings of the respective years. c. Find the projects NPV if cash flows occur at the middles of the respective years.
- An automobile manufacturer is considering whether to introduce a new model called the Racer. The profitability of the Racer depends on the following factors: The fixed cost of developing the Racer is triangularly distributed with parameters 3, 4, and 5, all in billions. Year 1 sales are normally distributed with mean 200,000 and standard deviation 50,000. Year 2 sales are normally distributed with mean equal to actual year 1 sales and standard deviation 50,000. Year 3 sales are normally distributed with mean equal to actual year 2 sales and standard deviation 50,000. The selling price in year 1 is 25,000. The year 2 selling price will be 1.05[year 1 price + 50 (% diff1)] where % diff1 is the number of percentage points by which actual year 1 sales differ from expected year 1 sales. The 1.05 factor accounts for inflation. For example, if the year 1 sales figure is 180,000, which is 10 percentage points below the expected year 1 sales, then the year 2 price will be 1.05[25,000 + 50( 10)] = 25,725. Similarly, the year 3 price will be 1.05[year 2 price + 50(% diff2)] where % diff2 is the percentage by which actual year 2 sales differ from expected year 2 sales. The variable cost in year 1 is triangularly distributed with parameters 10,000, 12,000, and 15,000, and it is assumed to increase by 5% each year. Your goal is to estimate the NPV of the new car during its first three years. Assume that the company is able to produce exactly as many cars as it can sell. Also, assume that cash flows are discounted at 10%. Simulate 1000 trials to estimate the mean and standard deviation of the NPV for the first three years of sales. Also, determine an interval such that you are 95% certain that the NPV of the Racer during its first three years of operation will be within this interval.The DC Cisco office is trying to predict the revenue it will generate next week. Ten deals may close next week. The probability of each deal closing and data on the possible size of each deal (in millions of dollars) are listed in the file P11_55.xlsx. Use simulation to estimate total revenue. Based on the simulation, the company can be 95% certain that its total revenue will be between what two numbers?The eTech Company is a fairly recent entry in the electronic device area. The company competes with Apple. Samsung, and other well-known companies in the manufacturing and sales of personal handheld devices. Although eTech recognizes that it is a niche player and will likely remain so in the foreseeable future, it is trying to increase its current small market share in this huge competitive market. Jim Simons, VP of Production, and Catherine Dolans, VP of Marketing, have been discussing the possible addition of a new product to the companys current (rather limited) product line. The tentative name for this new product is ePlayerX. Jim and Catherine agree that the ePlayerX, which will feature a sleeker design and more memory, is necessary to compete successfully with the big boys, but they are also worried that the ePlayerX could cannibalize sales of their existing productsand that it could even detract from their bottom line. They must eventually decide how much to spend to develop and manufacture the ePlayerX and how aggressively to market it. Depending on these decisions, they must forecast demand for the ePlayerX, as well as sales for their existing products. They also realize that Apple. Samsung, and the other big players are not standing still. These competitors could introduce their own new products, which could have very negative effects on demand for the ePlayerX. The expected timeline for the ePlayerX is that development will take no more than a year to complete and that the product will be introduced in the market a year from now. Jim and Catherine are aware that there are lots of decisions to make and lots of uncertainties involved, but they need to start somewhere. To this end. Jim and Catherine have decided to base their decisions on a planning horizon of four years, including the development year. They realize that the personal handheld device market is very fluid, with updates to existing products occurring almost continuously. However, they believe they can include such considerations into their cost, revenue, and demand estimates, and that a four-year planning horizon makes sense. In addition, they have identified the following problem parameters. (In this first pass, all distinctions are binary: low-end or high-end, small-effect or large-effect, and so on.) In the absence of cannibalization, the sales of existing eTech products are expected to produce year I net revenues of 10 million, and the forecast of the annual increase in net revenues is 2%. The ePIayerX will be developed as either a low-end or a high-end product, with corresponding fixed development costs (1.5 million or 2.5 million), variable manufacturing costs ( 100 or 200). and selling prices (150 or 300). The fixed development cost is incurred now, at the beginning of year I, and the variable cost and selling price are assumed to remain constant throughout the planning horizon. The new product will be marketed either mildly aggressively or very aggressively, with corresponding costs. The costs of a mildly aggressive marketing campaign are 1.5 million in year 1 and 0.5 million annually in years 2 to 4. For a very aggressive campaign, these costs increase to 3.5 million and 1.5 million, respectively. (These marketing costs are not part of the variable cost mentioned in the previous bullet; they are separate.) Depending on whether the ePlayerX is a low-end or high-end produce the level of the ePlayerXs cannibalization rate of existing eTech products will be either low (10%) or high (20%). Each cannibalization rate affects only sales of existing products in years 2 to 4, not year I sales. For example, if the cannibalization rate is 10%, then sales of existing products in each of years 2 to 4 will be 10% below their projected values without cannibalization. A base case forecast of demand for the ePlayerX is that in its first year on the market, year 2, demand will be for 100,000 units, and then demand will increase by 5% annually in years 3 and 4. This base forecast is based on a low-end version of the ePlayerX and mildly aggressive marketing. It will be adjusted for a high-end will product, aggressive marketing, and competitor behavior. The adjustments with no competing product appear in Table 2.3. The adjustments with a competing product appear in Table 2.4. Each adjustment is to demand for the ePlayerX in each of years 2 to 4. For example, if the adjustment is 10%, then demand in each of years 2 to 4 will be 10% lower than it would have been in the base case. Demand and units sold are the samethat is, eTech will produce exactly what its customers demand so that no inventory or backorders will occur. Table 2.3 Demand Adjustments When No Competing Product Is Introduced Table 2.4 Demand Adjustments When a Competing Product Is Introduced Because Jim and Catherine are approaching the day when they will be sharing their plans with other company executives, they have asked you to prepare an Excel spreadsheet model that will answer the many what-if questions they expect to be asked. Specifically, they have asked you to do the following: You should enter all of the given data in an inputs section with clear labeling and appropriate number formatting. If you believe that any explanations are required, you can enter them in text boxes or cell comments. In this section and in the rest of the model, all monetary values (other than the variable cost and the selling price) should be expressed in millions of dollars, and all demands for the ePlayerX should be expressed in thousands of units. You should have a scenario section that contains a 0/1 variable for each of the binary options discussed here. For example, one of these should be 0 if the low-end product is chosen and it should be 1 if the high-end product is chosen. You should have a parameters section that contains the values of the various parameters listed in the case, depending on the values of the 0/1 variables in the previous bullet For example, the fixed development cost will be 1.5 million or 2.5 million depending on whether the 0/1 variable in the previous bullet is 0 or 1, and this can be calculated with a simple IF formula. You can decide how to implement the IF logic for the various parameters. You should have a cash flows section that calculates the annual cash flows for the four-year period. These cash flows include the net revenues from existing products, the marketing costs for ePlayerX, and the net revenues for sales of ePlayerX (To calculate these latter values, it will help to have a row for annual units sold of ePlayerX.) The cash flows should also include depreciation on the fixed development cost, calculated on a straight-line four-year basis (that is. 25% of the cost in each of the four years). Then, these annual revenues/costs should be summed for each year to get net cash flow before taxes, taxes should be calculated using a 32% tax rate, and taxes should be subtracted and depreciation should be added back in to get net cash flows after taxes. (The point is that depreciation is first subtracted, because it is not taxed, but then it is added back in after taxes have been calculated.) You should calculate the company's NPV for the four-year horizon using a discount rate of 10%. You can assume that the fixed development cost is incurred now. so that it is not discounted, and that all other costs and revenues are incurred at the ends of the respective years. You should accompany all of this with a line chart with three series: annual net revenues from existing products; annual marketing costs for ePlayerX; and annual net revenues from sales of ePlayerX. Once all of this is completed. Jim and Catherine will have a powerful tool for presentation purposes. By adjusting the 0/1 scenario variables, their audience will be able to see immediately, both numerically and graphically, the financial consequences of various scenarios.
- If you want to replicate the results of a simulation model with Excel functions only, not @RISK, you can build a data table and let the column input cell be any blank cell. Explain why this works.A common decision is whether a company should buy equipment and produce a product in house or outsource production to another company. If sales volume is high enough, then by producing in house, the savings on unit costs will cover the fixed cost of the equipment. Suppose a company must make such a decision for a four-year time horizon, given the following data. Use simulation to estimate the probability that producing in house is better than outsourcing. If the company outsources production, it will have to purchase the product from the manufacturer for 25 per unit. This unit cost will remain constant for the next four years. The company will sell the product for 42 per unit. This price will remain constant for the next four years. If the company produces the product in house, it must buy a 500,000 machine that is depreciated on a straight-line basis over four years, and its cost of production will be 9 per unit. This unit cost will remain constant for the next four years. The demand in year 1 has a worst case of 10,000 units, a most likely case of 14,000 units, and a best case of 16,000 units. The average annual growth in demand for years 2-4 has a worst case of 7%, a most likely case of 15%, and a best case of 20%. Whatever this annual growth is, it will be the same in each of the years. The tax rate is 35%. Cash flows are discounted at 8% per year.A company manufacturers a product in the United States and sells it in England. The unit cost of manufacturing is 50. The current exchange rate (dollars per pound) is 1.221. The demand function, which indicates how many units the company can sell in England as a function of price (in pounds) is of the power type, with constant 27556759 and exponent 2.4. a. Develop a model for the companys profit (in dollars) as a function of the price it charges (in pounds). Then use a data table to find the profit-maximizing price to the nearest pound. b. If the exchange rate varies from its current value, does the profit-maximizing price increase or decrease? Does the maximum profit increase or decrease?