If the market value of firm A is $1.5 million and the replacement cost of capital is $450,000, find the Tobin's q. d. Should the firm replace capital? Elaborate on your response.
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If the market value of firm A is $1.5 million and the replacement cost of capital is $450,000, find the Tobin's q.
d. Should the firm replace capital? Elaborate on your response.
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- If the market value of Firm A is 2.2 million and the replacement cost of capital is 605,500. Find the Tobin's q. Should the firm replace capitalWhen deciding upon the optimal amount of capital, a firm will decide to purchase additional capital if (CV) When deciding upon the optimal amount of capital, a firm will decide to purchase additional capital if the cost of capital falls below the previous period's cost the marginal benefit of capital equals or exceeds the marginal cost of the capital the marginal benefit of capital is less than the marginal cost of the capital the additional capital will add necessitate hiring more laborA motor vehicle assembly plant requires the use of both capital and labour. The Tesla manufacturing plant is considering increasing the number of workers to increase production. Does diminishing returns hold in this scenario (yes/no? Explain
- A motor vehicle assembly plant requires the use of both capital and labor. The Tesla manufacturing plant is considering increasing the number of workers to increase production. Does Diminishing return hold s this scenario? Y YES/NO. Give reason for you answerA U.S. electronics firm is considering moving its production abroad. Its production function is: q=L = L 0.50 0.50 (based on Hsieh, 1995), so MPL = 0.5q/L and MPK = 0.5q/K. In the United States, w=$10=r. At its Asian plant, the firm will pay a 10% lower wage and a 10% higher cost of capital: w* = $9.09 and r* = $11.00. What are L and K and what is the cost of producing q= 100 units in both countries? (for all responses, enter a real number rounded to two decimal places) In the U.S., L is 100, K is 100, and the cost of production is $ 2000 In Asia, LisA firm faces the following costs: total cost of capital = $8,000; price paid for labor = $20 per labor unit; and price paid for raw materials = $6 per raw-material unit. Initially, the firm can produce 2,000 units of output by combining its fixed capital with 250 units of labor and 400 units of raw materials. After the firm improves its production process, it can produce 5,000 units of output by combining its fixed capital with 150 units of labor and 300 units of raw materials. How will the firm's total costs change as a result of the improved production process? Instructions: Enter your answers as a whole number. Total cost changes from $ ___ using the original process to $ ___ using the improved process. plz answer correct asap dont answer by pen pepar
- Suppose that the production function of a firm is given by Y = AK'/2L'/2, where A = 1 and L = 100. Suppose further that the price of the capital good (P) is 5, the price of the final output good (P) is 2, and the real interest rate is 0.1, and the depreciation rate is 0.1. 1. What is the replacement cost of the installed capital? 2. Suppose currently we have K = 64. Calculate the market value of the installed capital (as- sume that both A and L remain at the current values in the future). What is the value of Tobin's q? Should the firm increase or decrease its capital stock? 3. What is the optimal level of capital? What is the value of Tobin's q under the optimal level of capital? 4. Suppose that there has been a large inflow of migration, so L jumped to 144. What is the new optimal level of capita?A firm faces the following costs: total cost of capital = $4,000; price paid for labor = $20 per labor unit; and price paid for raw materials = $8 per raw-material unit. Initially, the firm can produce 2,000 units of output by combining its fixed capital with 200 units of labor and 500 units of raw materials. After the firm improves its production process, it can produce 3,000 units of output by combining its fixed capital with 100 units of labor and 500 units of raw materials. How will the firm's total costs change as a result of the improved production process? Instructions: Enter your answers as a whole number. Total cost changes from $ 12000 O using the original process to $ 2000| O using the improved process.Returns to scale in production: Recall that a production function F(K, L) exhibits constant returns to scale if doubling the inputs leads to a doubling of output. If it leads to more than doubling of output, there are increasing returns to scale; if it leads to less than doubling of output, there are decreasing returns to scale. The answers to parts (a) and (f) are worked out below. (a) Y = K1/2L1/2. If we double K and L, output is (2K) 1/2(2L) 1/2 = 21/221/2K1/2L1/2 = 21/2+1/2K1/2L1/2 = 2K1/2L1/2. So output exactly doubles, and there are constant returns to scale. (b) Y = K1/3L2/3 + . This production function says you get units of output “for free,” that is, even if there is no capital and no labor. Then you produce on top of that with a Cobb-Douglas production function. If we double K and L, output is Notice that the first term is doubled, but the output we got for free (the A) is left unchanged. Therefore, output is less than doubled, and this…
- Does the scenario present an example of post-investment holdup? Your company took note of your progress toward your MBA, and when the director for customer services left the company, you were asked to take over as interim director. You were encouraged to apply for the full-time position once you got your MBA. You served for 13 months, at which time your company was acquired by another company and your position was abolished. If yes: What is the sunk, or straned, cost? What is the contract? Was the contract breached? What are the damages?A firm manufactures power steering units. The Rent on the building is 1,000,000 per year. The administrative costs that will be incurred even if a single unit is not sold is $500,000 for the year. Salaries for people who cannot be let go are $500,000 for the year. Raw materials for each unit costs $1,000 for each unit. Labor hired only for working on the units (they will get let go if no units sell) is $250 per unit. Electricity and other costs spent directly on the units is $250 per unit. If each unit sells for $3,000 per unit, what is the break even number of units that must be sold? ·State true/False # When there is diminishing returns to a factor, the value of both MP and TP falls