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RSB [31]
2 years ago
10

Consider a firm which produces T-shirts according to Q = L^0.5, where Q denotes output and L is labor input. The domestic wage i

s w = 2. The firm can sell its output for a given price of p = 1.
(a) Determine the profit-maximizing labor input and the profit of the firm.
Business
1 answer:
Luden [163]2 years ago
4 0

From the calculation below, the profit-maximizing labor input is 0.0625, and the profit of the firm is 0.125.

<h3>How do we determine profit-maximizing labor input and profit?</h3>

From the question, we can obtain:

R = Revenue = Q*P = L^0.5 * 1 = L^0.5

C = Cost = w * L = 2L

P = Profit = R - C = L^0.5 - 2L

To obtain the profit-maximizing labor input, the first derivative of P is taken, equated to zero, and we solve for L as follows:

P' = 0.5L^-0.5 - 2 = 0

0.5L^-0.5 = 2

L^-0.5 = 2 / 0.5

L^-0.5 = 4

L^(-0.5/-0.5) = 4^(-1/0.5)

L = 0.0625 ----> profit-maximizing labor input

The profit (P) of the firm can now be calculated by substituting L = 0.0625 into the P function as follows:

P =  0.0625^0.5 - (2 * 0.0625) = 0.125 --------> Profit of the firm

Learn more about profit function here: brainly.com/question/16866047.

#SPJ1

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EB5.
lord [1]

Answer:

                                    $

Material used            2,500                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

Direct labour             5,000

Overhead applied    200

Cost of goods sold   7,700                                                                                    

Explanation:

The overhead applied is the difference between cost of goods sold and cost of material used and direct labour. The cost of goods sold is $7,700 while the cost of material and labour is $7,500. The difference of $200       represents the overhead applied.                                                                                                                                                                                                                                                

7 0
3 years ago
Pompeii, Inc., has sales of $46,200, costs of $23,100, depreciation expense of $2,200, and interest expense of $1,700. If the ta
ycow [4]

Answer:

The net operating cashflows are 18,876 dollars.

Explanation:

Operating cashflows are cashflows which an entity generates from it core operations. In other words cash flow related to investment and finance activities do not form part of an entity operaing cashflows.

So in this example interest will not be part of operating cashflows.

For more details please refer to below given calculations.

OCF

Sales       46,200

Cost         (23,100)

Tax            (4,224) (W-1)

OCF          18,876

(W-1)  Calculating profit to find tax paid

(46,200-23,100-2,200-1,700)*22%

5 0
3 years ago
At the beginning of the year, Sigma Company's balance sheet reported Total Assets of $195,000 and Total Liabilities of $75,000.
olchik [2.2K]

Answer:

The answer is: Equity at the end of the year will be $123,000

Explanation:

At the beginning of the year the balance sheet was as following:

assets $195,000                   liabilities $75,000

                                              equity $ 120,000

Then during the year the income statement is:

  • total revenues $226,000
  • <u>total expenses $175,000  </u>
  • net income       $ 51,000 (this increases assets and equity)

If the owners withdrew $48,000, then cash and equity will decrease.

The ending balance for the year:

assets $195,000 + $51,000          liabilities $75,000

           -$48,000 =                         equity $120,000 + $51,000 - $48,000 =

           $198,000                                       $123,000

5 0
3 years ago
Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $9.10; direct
Ghella [55]

Answer:

$0 cost or savings per unit

Explanation:

Cost to Buy

Purchase Price       $31.40

and,

Costs to Make

Direct materials        $9.10

Direct labor              $13.10

Variable overhead   $2.10

Fixed Overheads     $7.10

Total                        $31.40

therefore

The net incremental cost or savings of buying the component is $0 cost or savings per unit

5 0
3 years ago
Suppose that a small country currently has $4 million of currency in circulation, $6 million of checkable deposits, $200 million
Luda [366]

Answer:

Please see attachment

Explanation:

Please see attachment

7 0
3 years ago
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