Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Microeconomics Expert

Include assumptions about the elasticity of the demand and market structure for the company’s good or service. Analyze data to determine fixed and variable costs.

Answer the following problems with justification:

i) How will you increase revenue?

ii) How will you determine the profit-maximizing quantity?

iii) How could you use the concepts of marginal cost and marginal revenue to maximize profit? What information do you need to determine this? Without this information, how would you make a decision?

iv) Are there other ways to minimize costs for the product?

Thomas Money Service Inc. Scenario

Thomas Money Service Inc. has been in business since 1940. It started out as the consumer finance company granting small loans for the household needs. Over the following 5 years, company expanded its services by issuing business loans, business acquisition financing, and commercial real estate loans.

In 1946, decision was made to branch out into equipment financing. Subsidiary named Future Growth Inc. (FGI) was established. This decision turned out to be very profitable. Because of the end of World War II, society had huge demand for the construction and forestry equipment. Because of increasing demand for this type of equipment, FGI decided to make very daring move in 1951 and purchased the equipment manufacturing company. Now they can build, sell, and finance their own brand of building and forestry equipment. FGI discontinued financing other brands of equipment.

For 67 years, FGI had been able to truthfully state that they have continuously increased profits year after year, even during economic downturns, and have never laid off workers. This track record has allowed their stock to grow from $5.00 to $85.60 with six stock splits from 1975 to 1998. FGI has never issued bonds, and the present stock value is $35

Current global downturn has caused the American economy to suffer. Oregon, Washington, and several other forestry states have encountered flooding, massive fires, and protest from animal activists. For the first time in the FGI history, profits declined—down 30% from last year—and they had to lay off one-third of their workforce.

Falling economy has also caused a drop in new-home sales: sales dropped 30% from the previous year and additional declines are expected. This has caused a domino effect throughout the entire construction industry. Not all sectors, however, are being hit equally by the economy. Opportunities are in hospitals and nursing homes that have a demand for new buildings.

Data

• There are currently many domestic and international companies manufacturing construction and forestry equipment. Each company’s equipment offers slightly different features and functions that allow market to supply many substitutes.
• FGI has repossessed over 500 pieces of equipment during the past year. They have bundled the pieces together and determined an average price for each piece. Present selling price is $1,732. Below are the demand figures for each price.

Demand data in millions in the past years

Price                     Demand
1,990.1                 123

1,732.0                 182

1,634.3                 350

1,252.0                 380

732.1                    400

622.3                    456

• In recent years, FGI had decreased its advertisement revenue, selecting to have the commercial during the Super Bowl and a few other sporting events.

FGI has cut down on manufacturing because of the lack of demand. Below is the combined production cost for construction and forestry equipment. What level of demand generates the greatest net income?

1855_productin cost.jpg

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9436

Have any Question? 


Related Questions in Microeconomics

Question jared bernstein an economist at the center on

Question: Jared Bernstein, an economist at the Center on Budget and Policy Priorities, has stated: "I want to see receipt of unemployment insurance go up in recessions." If government unemployment insurance payments didn ...

Question assume that us imports have an income elasticity

Question: Assume that US imports have an income elasticity of 1.3 and a price elasticity of -0.5, and US exports have an income elasticity of 1.2 and a price elasticity of -0.7. They also have a ‘‘repercussion elasticity ...

Question in the late 1990s dr chris sarra became the first

Question: In the late 1990s, Dr Chris Sarra became the first Aboriginal principal of Cherbourg State School where he made significant changes to the way that Indigenous students experienced education. Dr Sarra challenged ...

Question suppose that the demand function for carrots is q

Question: Suppose that the demand function for carrots is Q D = 200 - 2 p, and the supply function is Q S = 16 p. find the: equilibrium price, equilibrium quantity, consumer surplus, producer surplus, and govt revenue fo ...

Question what is a high-performance work system provide

Question: What is a high-performance work system? Provide examples of the typical components in a high-performance work system. The response must be typed, single spaced, must be in times new roman font (size 12) and mus ...

Question suppose the production function is q k12l12

Question: Suppose the production function is Q = K 1/2 L 1/2 . Assume K = 16 and L-4. What is the total output? What is the average product of capital? What is the average product of labor? What is the marginal product o ...

Question by visiting the bureau of labor statistics website

Question: By visiting the Bureau of Labor Statistics website, find the latest unemployment rate available for your state (New Jersey 4.2% in Mar 2017). How does the unemployment rate of your state compare to that of the ...

Question in an effort to stop the migration of many of the

Question: In an effort to stop the migration of many of the automobile manufacturing facilities from the Detroit area, Detroit's city council is considering passing a law that would give investment tax credits to auto ma ...

Question a business that engages in substantial trading of

Question: A business that engages in substantial trading of commodities, currencies, and financial instruments must trust its traders to act with some prudence and with knowledge that the company's overall financial perf ...

Question a if a particular job had very elastic demand what

Question: A. If a particular job had very elastic demand, what would be the outcome if workers wanted a higher wage? What if the demand was very inelastic, what would be the likely outcome? B. What is the relationship of ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As