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# Homework #2 BADM 631 EMS11 Due: 8am May 20, 2010 Name: General Instructions Please enter your answers directly into this document and return via...

Please check the excel file. Thanks.
Question 3-- (25 points) A firm’s fixed costs for 0 units of output and its average total cost of producing different output levels are summarized in the table below. Complete the table to find the fixed cost, variable cost, total cost, average fixed cost, average variable cost, and marginal cost at all relevant levels of output. Question 4-- (25 points) The A-1 Corporation supplies airplane manufacturers with preformed sheet metal panels that are used on the exterior of aircraft. Manufacturing these panels requires only five sheet metal-forming machines, which cost \$300 each, and workers. These workers can be hired on an as-needed basis in the labor market at \$7,000 each. Given the simplicity of the manufacturing process, the preformed sheet metal panel market is highly competitive. Therefore, the market price for one of A-1’s panels is \$50. Based on the production data in the following table, how many workers should A-1 hire to maximize profits?

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Solutions
Solution 1:
a) We know that,
Pz=\$400 and Px=\$154
Own price elasticity of demand is given by: (dQ / dPx)*(Px/Q)
When we differentiate Q with respect to Px, we get dQ / dPx = -2
Qx=1000 –...

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