QUESTION 1 1. Identify which of the following described scenarios involve a firm acting in such a way as to incur opportunity costs. Select any/all such scenarios. A. A firm is preparing a...

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Answer To: QUESTION 1 1. Identify which of the following described scenarios involve a firm acting in such a...

Alomita answered on Dec 12 2021
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QUESTION 1
1. Identify which of the following described scenarios involve a firm acting in such a way as to incur opportunity costs. Select any/all such scenarios.
    
    A.
    A firm is preparing a depreciation schedule for costs that have already been incurred to pursue an opportunity in order to accurately account for its return on investment.
    
    B.
    A firm has taken stock of the costs on its
income statement for the purpose of conducting a break-even analysis, and now needs to estimate the break-even quantity.
    
    C.
    A firm is considering which of up to 4 attractive new market segments to enter, and has decided to enter markets #2 and #3 because they offer the most overall revenue.
    
    D.
    A firm holds a number of capital goods and assets with potential productive value, but has not yet identified any opportunities for their use so has chosen to keep them idle.
ANS :
QUESTION 2
1. Identify which of the following statements are good descriptions of the conditions that exist under market equilibrium. Select any/all accurate statements.
    
    A.
    When a market is in equilibrium, every consumer who wants to obtain a good is able to buy it
    
    B.
    When a market is in equilibrium, prices reflect the maximum people are willing to pay for a good
    
    C.
    When a market is in equilibrium, every firm in the industry is earning equal overall profit margins
    
    D.
    When a market is in equilibrium, the number of units bought and units offered for sale are equal
ANS : A market equilibrium is a situation where market demand equals market supply or in other words , the consumers are able to buy the goods at the same price as the producers are able to sell their goods, the number units bought equals the number of units offered for sale. So , in the given question, the following options A,B,D are appropriate description to explain the market equilibrium situation.
QUESTION 3
1. Choose 1 of the wrong (unselected) answers from question 2 above and explain why it is not a good description of market equilibrium.
ANS : In question 2 , option C is inappropriate for the description of market equilibrium because in an equilibrium situation , a firm earns a normal profit, that is , zero profit. In other words , normal profit allows the firms to make just enough over cost , so they are compensated for their opportunity costs. A firm reaching the normal profit position is certainly is in its long run equilibrium. There can be no economic profit in long run equilibrium , but all firms earn normal or zero profit in the long run.
    
QUESTION 4
1.
Both of the building sets depicted above contain ~450 pieces and 3 figures, both leverage a popular theme, and both build a complex spaceship model using similar pieces.
The Mega Bloks Halo set is priced at $45, while the LEGO Star Wars set is priced at $55. In the last 10 years, LEGO grew from 70% to 80% share of the construction toy market and its revenue grew 3x faster than Mega Bloks’.
Based on the above descriptions of the firms’ market outcomes and product offerings, identify 1 of the following statements that is almost certainly true concerning these products and 1 statement that is almost certainly not true.
A. The Mega Bloks and LEGO sets shown are nearly perfect substitutes for each other
     B.
    Mega Bloks’ average cost of production for a 450-piece set is less than LEGO’s cost
     C.
    Mega Bloks’ marginal profit per 450-piece set sold is less than LEGO’s marginal profit
     D.
    Consumers perceive the value of LEGO's’ set to be at least $10 more than Mega Bloks'
     E.
    Consumers on average are not willing to pay $55 for a 450-piece Mega Bloks building set
     F.
    Consumers on average are not sensitive to price increases in their demand for building sets
    
    
Which statement is most likely to be true?
        
    
    Which statement is most likely to not be true? 
    
10 points
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