Paragraph 2. Review content learned on Day 6. 3. Download "Assignment 4- Question and Answer Sheet.docx" and answer the 4 questions included. 4. Type your answers in the answer sheet. 5. Make sure you use appropriate in-text citation and referencing to avoid plagiarism. 6. Proofread all your answers. 7. Submit the answer sheet to the Assignment 4 Submission Folder. Questions Organizations strive to achieve a standard of production wherein they aim to optimize their output at the minimum cost. This is called economic efficiency. In this process, the production function is impacted by the short run and long run factors. Question 1 Explain the difference between short run and long run. Type your answer here. Question 2 Explain the impact of the following factors on production in the short run. a. Total Product Function (TP) b. Marginal Product of Labour (MP) c. Average Product of Labour (AP) d. Law of Diminishing Returns Type your answer here. Question 3 What are different types of costs involved in production of goods and services? Analyze the relationship between cost and productivity in the short run. Type your answer here. Question 4 Explain the concepts of economies and diseconomies of scale in the long run. Interpret your answer with the help of examples. Type your answer here.
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Step 2: In the short run, the Total Product Function (TP) shows the total output produced with a given amount of input. The Marginal Product of Labour (MP) measures the change in output resulting from one additional unit of labor. The Average Product of Labour Show more…
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Consider the standard version of the Melitz (2003) model that we studied in class. a) (25 points) Assume that due to a breakdown of international agreements, there is a multilateral increase in the variable trade cost, due to higher tariffs and non-tariff barriers. Show and discuss the effects of this episode of trade ‘disintegration’ on firms’ survival on the domestic and export market. Use equations and figures to construct your argument. b) (25 points) What is the impact of the increase in the variable trade cost discussed above on the economy’s real income (GDP)? Explain the different channels through which welfare (real income) is affected. Who wins and who loses from this episode of trade disintegration? Explain. Now assume that firms can choose to reach the foreign country via export or MNA, as we saw in class. c) (25 points) Abstracting from the general equilibrium effect on the aggregate demand shifter, that is keeping B constant, derive and discuss the effects of the increase in variable trade cost discussed above on firms’ choice between export and MNA. Derive and discuss the effect of an increase in the plant-level fixed cost fD on firms’ choice between export and MNA. Use equations and figures to construct your argument. c) (25 points) Allowing for the general equilibrium effect on the aggregate demand shifter, derive and discuss the effects of the increase in variable trade cost on firms survival on the domestic market, and on firms’ choice between export and MNA. Hint: the free entry condition can be written as Ez≥zD[(z/zD)^(σ−1)− 1]fD+Ez≥zX[(z/zX)^(σ−1)− 1]fX+Ez≥zI[(z/zI)^(σ−1)− 1](fX + fD) = fe Recall that you can express zI as a function of zX, using the equilibrium conditions. Thus, you can analyse the equilibrium using the same graphical exposition we saw for the standard Melitz model.
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Text: Prepare and submit a case memo on the course site. Follow instructions you find there. As you prepare your memo, please note these assumptions concerning RP#1 operations as the basis for your analysis and recommendations. Some of them differ slightly from statements in the case. - On a typical busy day, 17,280 barrels (bbl) of cranberry deliveries arrive evenly over the 12-hour period starting from 7 am. This is based on a typical busy day in September. Since berries arrive evenly, you can ignore variability in calculation. - Plant processing is assumed to start at 7 am, and any work after the scheduled end of the second shift at 11:00 pm will incur overtime costs. - The process is approximately a "continuous flow" type. - Wet berries are 75% of all berries, dry berries 25%. - Holding bins 17-24 are dedicated to wet berries. - Capacity of the dumpers is 3,000 bbl/hr (logic: it takes on average 7.5 minutes to dump a truck, a truck holds on average 75 bbl. So, from Little's Law, each of the five dumpers will take 600 bbl/hr). - There are 3 (not 9) separator lines, with a maximum rate of 450 bbl/hour per line, average effective capacity of about 400 bbl/hour per line. - Cranberry processing operation steps (shown as boxes in the flow map) hold a negligible amount of inventory compared to what bins and trucks (shown as triangles in the flow map) can hold. - Drivers are paid $100/hr. Rates for other employees are given in the case. Question 4: (10 points) Analyze Capital Investment Decisions: Bin Conversions Suppose that no new dryers will be purchased. An alternative countermeasure to accommodate an increase in the percentage of wet berries in the current year is to convert some of the dry-only bins to accommodate wet berries. A. How many bins would NCC need to convert to eliminate all truck waiting? B. Using your answer from 4A, quantify the costs and benefits of this investment. C. Recommend the best number of bins to convert and justify briefly. D. If you could choose dryer purchase, bin conversion, or a combination, what would you choose? Justify briefly.
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