Question 2

Attempt the questions below.

There is a specific relationship between marginal, average total and average variable costs. For the following parts of this equation work with the general function: TC=a+f(Q).

1.) What is the marginal, average total and average variable cost curves associated with the total cost curve specified above? Show the three curves graphically on the same diagram.

2.) Show mathematically that the marginal cost curve cuts the average total and average variable cost curves at their minimum points.

3.) Demonstrate mathematically that the minimum point of an averageof the average variable cost curve does not occur at the same level of output as the minimum point of the average total cost curve

Find a list of scenarios of Ethics and Standards of practice in Table 5. In each case list the standard applicable for example: Standard I (D) Misconduct. Then state if there has been a violation or not and a reason for your answer. (8)

5.1 James Smith is a retired equities trader who manages his own portfolio. He owns shares in a large local bank, ABC Bank. A close friend John Spear, is a senior executive at ABC Bank. ABC has seen its share price drops considerably, and the news and outlook are not good. In a conversation about the economy and the banking industry over lunch John relays the information that ABC will surprise the investment community in a few days when it announces excellent earnings for the quarter. James is pleasantly surprised by this information - he doubles his position in the bank. Subsequently, ABC announces that it had good operating earnings but had to set aside reserves for anticipated significant losses on its loan portfolio. The combined news causes the share to go down 60%.

5.2 Jana Joko, an equity analyst at Typo a large broking firm, submits reimbursement forms over a two-year period to Typo's self-funded health insurance program for bills, most of which have been changed to increase the amount due. An investigation by the firm's director of employee benefits uncovers the inappropriate conduct.

5.3 Kyle Komo directs a large amount of his commission business to a New York- based brokerage house. In appreciation for all the business, the brokerage house gives Kyle a few bottles of wine. In addition, they give him two tickets to the World Cup in South Africa, two nights at a nearby resort, several meals and transportation via limousine to the game. Kyle discloses receiving a gift from the brokerage house to the value of the wine to his supervisor.

5.4 Kingsley Bumm is a performance analyst for Tromp Investment Funds. Kingsley believes that the portfolio manager for the firm's small- and microcap equity fund dislikes him because the manager never offers him tickets to the local rugby team's games but does offer tickets to other employees. To incite a potential regulatory review of the manager, Kingley creates user profiles on several online forums under the portfolio manager's name and starts rumors about potential mergers for several of the smaller companies in the portfolio. As the prices of these companies' shares increase, the portfolio manager sells the position, which leads to an investigation by the regulator as Kingsley desired.

Question 12 (1 point) Consider a perfectly competitive market in the long run. We can mathematically state a typical firm's total cost function as Total cost = 768 + 3 q?, and its marginal cost as Marginal cost = 6 q. For the entire market, the demand can be explained by the following equation: Quantity demanded = 304 + Price. In the long-run equilibrium how many firms will operate on the market? Write the whole number.Question #4: (30 marks) Nimbus Led. makes brooms and then sells them door to door. Here is the relationship between the number of workers and Nimbus's output in a given day: Average Workers Output Marginal Product Total Cost Total Cost Marginal Cost 1 30 2 70 3 120 4 160 5 190 6 210 7 220 a. Calculate and fill in the column of marginal products. What pattern do you see? How might you explain it? Hints: show your calculations. (5 marks] b. A worker costs $150 per day, and the firm has fixed costs of $300. Use this Information to calculate and fill in the column for total cost. Hints: show your calculations. (5 marks) C. Calculate and fill in the column for average total cost. (Recall that ATC=TC/Q.) What pattern do you see? Hints: show your calculations. (5 marks) d. Now calculate and fill in the column for marginal cost. (Recall that ATC/AQ.) What pattern do you see? Hints: show your calculations. (5 marks] e. Compare the column for marginal product and the column for marginal cost. Explain the relationship. (5 marks) f. Compare the column for average total cost and the column for marginal cost. Explain the relationship. (5 marks)The table shows the marginal cost for a company's product at various production levels. Marginal cost Marginal cost Units ($/unit) Units ($/unit) 0 3.26 7000 2.18 1000 2.87 8000 2.17 2000 2.79 9000 2.19 3000 2.72 10,000 2.23 4000 2.52 11,000 2.37 5000 2.40 12,000 2.67 6000 2.27 13,000 2.83 (a) Estimate the cost (not including fixed costs) to produce the first 12,000 units by considering batches of 2000 units. Use the initial marginal cost for each batch in your calculations. S (b) Use batches of 1000 units and the ending marginal cost for each batch to estimate the cost of raising the production level from 4000 to 11,000 units. SNimbus Ltd. makes brooms and then sells them door to door. Here is the relationship between the number of workers and Nimbus 5 output In agiyen day: Average Marginal Product Total Cost Total Cost Marginal Cost a. Calculate and ll in the column of marginal products. What pattern do you see? How might you explain it?I HinE: show your calculations. {5 marks} b. A worker costs $150 per day, and the rm has xed costs of $300. Use this information to calculate and ll in the column for total cost. HinE: show your calculations. [5 marks} c. Calculate and ll in the column for average total cost. {Recall that ATEzch} What pattern do you see? Hints: show your calculations. [5 marks} d. Now calculate and ll in the column for marginal cost. [Recall that TCf.) What pattern do you see? Hints: show your calculations. [5 marks] e. Compare the column for marginal product and the column for marginal cost. Explain the relationship. {5 marks} f. Compare the column for average total cost and the column for marginal cost. Explain the relationship. {5 marks}