We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Company profit calculation - Assignment Example

Comments (0)
Summary
Perfect Competition Question One MC = 3 + 6Q + 3Q2 Part (a) At the profit maximisation level, P = MC = $48: 48 = 3 + 6Q + 3Q2 Q2 + 2Q – 15 = 0 The roots of the equation are: Q = 3 and Q = -5 Since Q = -5 is not physically possible, so Q = 3. ? Profit is maximised when output level is 3 units…
Download full paper
GRAB THE BEST PAPER
Company profit calculation
Read TextPreview

Extract of sample
Company profit calculation

Download file to see previous pages... Q = (accepted), (rejected) At Q = , ATC’’ becomes 9.61 while at Q = , ATC’’ becomes 0.381. Since Q > 0 and since ATC’’ > 0 at Q = , so it can be surmised that Q = when ATC is minimised. Part (g) Firms will neither exit nor enter in the longer run in an industry because already operating firms are creating normal profit. Since there are no incentives to either leave or enter the market in the longer run, so there will be no entry or exit in the longer run. Part (h) Question Two As market demand levels vary, the firm’s profits in any industry will tend to vary. As long as some form of economic profit is available, new firms will enter the market. Similarly, any kinds of economic loss will force firms to leave the market. When economic profit is available, the supply curve tends to shift to the right in order to reduce price. As price falls, so does economic profit and thus the incentive to enter the market. Conversely, if economic loss occurs, the supply curve shifts to the left in order to increase price. Bigger price tags tend to reduce the economic loss being faced. Market adjustments continue to occur until firms come to a point where the marginal revenue equals the marginal cost which in turn equals the price. Also, the short run average cost and the long term average cost meet the equilibrium levels to produce total market equilibrium in the longer run. Question Three A shock in demand leads to a sudden rise in demand. This in turn disrupts the market equilibrium and the supply curve tends to shift to the right while the demand curve tends to shift to the right as well. In addition, it is typical to find that the price for any product experiencing demand shock tends to increase as well. Larger quantities required are dealt with by firms operating under perfect competition. For constant cost industries, when the industry expands in reaction to demand shocks, there are no changes in the production costs or in the prices of resources. The basic contention of the constant cost industry is that as new firms enter the market, the long run average cost curve does not get affected. Hence, as the efficiency of production does not change due to demand shocks, the supply curve in the longer run becomes horizontal. Question Four Certain industries require long term economic profits in order to survive in the market. These industries may require continuous new inputs in the form of research and development (R&D). The pharmaceutical industry for example requires that research be carried out into new medicine. This may become necessary for example as one generation of antibiotics are unable to deal with the next generation of germs. The R&D process in turn requires the investment of economic profit which in turn can be labelled as a cost. The reinvested economic profit from the operation of such industries can be seen as a cost although it is not necessary that the amount of such an investment would equate to the economic profit generated. For example, the pharmaceutical industry invests in the development of a medicine that it will continue to produce constantly for decades which indicates that the economic prof ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Short-run profit maximization
The text “The Agency Problem” gives a great example of the agency problem by comparing it to the relationship between our country’s president and its citizens. In this case, the citizens are the principle and the president is the agent because the objectives and policies that the president pursues will ultimately effect the citizens of the country.
3 Pages(750 words)Assignment
Covering the measurement and calculation of Real GDP
The standard of living of a country is often measured by the per capita GDP. It will not be wise to think GDP per capita to be the measure of personal income. If the economic theories are taken into account, then per capita GDP will be same as per capita GDI (Gross Domestic Income).
12 Pages(3000 words)Assignment
Ratios/Profit Margin
Among these statements include balance sheet, income statements and cash flow. Practically, financial ratios are calculated to help in analyzing trends, as well, as to conduct a comparison of the company’s financial performance with other companies in the same industry (Lewellen, 2004).
3 Pages(750 words)Assignment
Prepare an equity research report comparing the financial performance of your chosen retail company with the financial performan
The company which started since a humble beginning is now considered analogous for high fashion and trendy wear. Since its inception the company has been growing leaps and bounds and it has always put the demands and needs of its customers as the priority.
30 Pages(7500 words)Assignment
Calculation
2 Pages(500 words)Essay
Company
These are the headquarters in Geneva that serves Latin America, Africa, India, Europe, and the Middle East. The Hong Kong office serves the Asia-Pacific
2 Pages(500 words)Assignment
Profit and loss account -
A higher ratio reflects high sales. Since a grocery deals with fast moving goods, which are perishable, we expect the stock turnover to be higher. In this case then B is the grocery store and A is of manufacturing concern. A company performance is mostly
1 Pages(250 words)Assignment
Company
The company has expanded its business profile to non-food business as well like electronic goods, toys and books and has recently
4 Pages(1000 words)Assignment
Wynn Las Vegas Financial Analysis
The competitors considered in this document include Bellagio, Venetian, Palazzo, and Aria. The paper analyzes the financial ratios of Wynn Resorts Ltd in comparison to the financial ratios of its four identified competitors. The
4 Pages(1000 words)Assignment
Calculation
The amount received is subject to marginal tax rate of 40%. Therefore, the amount received from selling the old ATM machine is reduced by 40%. On the other hand the gross outflow required for the installation of new ATM machine is $1,000,000. Therefore,
4 Pages(1000 words)Assignment
Let us find you another Assignment on topic Company profit calculation for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us