Buying a home is a big commitment. For most of us, it will be the biggest purchase we make in our lifetime. According to the National Association of Realtors, it also usually ties us to one place for about 12 years. Of course, the process is about more than finding a home you like. It’s about finding a home you can afford and enjoy for years to come. And the price tag you see isn’t the full story. It’s important to consider all of the financial factors of home ownership before you sign any dotted lines. Here are five costs to consider before buying a home this year (or any year!).
Answer:
The three stages of state-run production are readily seen with the three product curves-- total product, average product, and marginal product.
Answer:
Refer explanation
Explanation:
A. Average total cost (ATC) is the total cost divided by the number of units sold. It is unlikely to increase. This is especially because as more output is produced, fixed costs are spread over a larger number of units. Thus, the fixed cost per unit falls. The firm is also likely to exploit economies of scale (falling average costs due to rise in output). Thus, this is a decreasing cost industry.
B. The firm should charge $4 since the marginal cost i.e. the cost of producing an additional unit of output is $4. At this price, the firm would make a loss of $30 million since the price is enough only to cover the variable costs. It would not be able to cover the fixed costs of $30 million. The difficulty to make profits and the loss made would discourage the firm, causing it to exit the industry.
C. Profit = Total Revenue - Total Costs.
At price $5, total revenue = $5 x 30 million = $150 million. Total costs includes both variable and fixed costs. Fixed cost as provided is $30 million. Variable costs = $4 x 30 million = $120 million. Hence, total costs would be = $30 million + $120 million = $150 million. Profit/loss = $0 (150 million - 150 million). The firm is at the break-even point where TR is equal to TC and makes neither a profit nor a loss.
D. At 40 million bags demanded for $5, the total revenue would be = $5 x 40 million = $200 million. The total fixed cost would remain the same as provided in the question ($30 million). Total variable costs would now be $40 million x $4 = $160 million. Thus, the total costs are $160 million + $30 million = $190 million. Profit = $200 million (Total Revenue) - $190 million (Total Costs) = $10 million
E. The fair rate of return is the point where the economic profit is zero ($0). In order to identify the price, the costs are important. The firm’s fixed costs would remain as 30 million. The variable costs would be 40 million x $4 which is $160 million. The total cost would thus be $160 million + $30 million = $190 million.
It is important to then identity the total revenue. TR is equal to P x 40 million. This can then be substituted in the profit equation in order to obtain the price.
Profit = TR - TC
0 = 40P - $190 million
$190 million = 40P
P = $190 / 40
P = $4.75
Insurance products are viable and relevant to individuals because people worry about their medical expenses becoming too high for them to be able to afford. Businesses, on the other hand, need to protect their important investments and assets in order to preserve the business.<span />
