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Problem 1;Consider a firm that has just built a plant, which cost $20,000. Each worker costs $5.00;per hour. Based on this information, fill in the table below.;Number;of;Worker;Hours;0;50;100;150;200;250;300;350;Marginal;Product;0;400;900;1300;1600;1800;1900;1950;Fixed;Cost;Variable;Cost;--;Total;Cost;Marginal;Cost;20,000;20,250;20,500;20,750;21,000;21,250;21,500;21,750;Output;Average;Variable;Cost;--;--;Problem 2;Number Of;Workers;0;1;2;3;4;5;6;7;8;9;10;Output;0;50;110;300;450;590;665;700;725;710;705;The table above shows the weekly relationship between output and number of workers;for a factory with a fixed size of plant.;a. Calculate the marginal product of labor.;b. At what point does diminishing returns set in?;c. Calculate the average product of labor.;d. Find the three stages of production.;Average;Total;Cost;--;Problem 3;Mr. Lee operates a green grocery in a building he owns in one of the outer boroughs of;New York City. Recently, a large chemical firm offered him a position as a senior;engineer designing plants for its Asian operations. (Mr. Lee has a masters degree in;chemical engineering.) His salary plus benefits would be $95,000 per year. A recent;annual financial statement of his stores operations indicates the following;Revenue;$625,000;Cost of goods sold;325,000;Wages of workers;75,000;Taxes, insurance, maintenance, and;depreciation on building;30,000;Interest on business loan (10 %);5,000;Other miscellaneous expenses;15,000;Profit before taxes;$175,000;If Mr. Lee decides to take the job, he knows that he can sell the store for $350,000;because of the goodwill built with a steady clientele of neighborhood customers and the;excellent location of the building. If he would still hold onto the building, he knows he;could earn a rent of $50,000 on this asset. If he did sell the business, assume he would;use some of the proceeds from the sale to pay off his business loan of $50,000. He could;then invest the difference of $300,000 (i.e., $350,000 - $50,000) and expect to receive an;annual return of 9 percent. Should Mr. Lee sell the business and go to work for the;chemical company?;In answering this question, also consider the following information;a. In his own business, Mr. Lee works between 16 and 18 hours a day, 6 days a week. He;can expect to work between 10 and 12 hours a day, 5 days a week, in the chemical;company.;b. Currently, Mr. Lee is assisted by his wife and his brother, both of whom receive no salary;but share in the profits of the business.;c. Mr. Lee expects his salary and the profits of his business to increase at roughly the same;rate over the next 5 years.

 

Paper#15817 | Written in 18-Jul-2015

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