You are the manager of a firm that competes against four other firms by bidding for
government contracts. While you believe your products is better than the
competition, the government purchasing agent views the products as identical and
purchases from the firm offering the best price. Total government demand is Q = 750
– 8P and all five firms produce at a constant marginal cost of $50. For security
reasons, the government has imposed restrictions that permit a maximum of five
firms to compete in this market; thus entry by new firms is prohibited. A member of
Congress is concerned because no restrictions have been placed on the price that
the government pays for this product. In response, she has proposed legislation that
would award each existing firm 20% of a contract for 270 units at a contracted price
of $60 per unit. Would you support or oppose this legislation? Explain. (Hint: Absent
the legislation, the market will be a Bertrand oligopoly with a homogeneous product.
In this case, what will be your profit? If the legislation is adopted, what then will be
your profit? Which is bigger?)

Which of the following statements is not correct? 1) trade allows for specialization. 2) trade has the potential to benefit all nations. 3) trade allows nations to consume outside of their production possibilities curves. 4) absolute advantage is the driving force of specialization.

Suppose someone wants to sell a piece of land for cash. the selling of a piece of land represents turning econ

Zachary company produces commercial gardening equipment. since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. the costs and cost drivers associated with the four overhead activity cost pools follow: activities unit level batch level product level facility level cost $ 64,800 $ 27,730 $ 15,000 $ 154,000 cost driver 2,400 labor hrs. 47 setups percentage of use 11,000 units production of 780 sets of cutting shears, one of the company’s 20 products, took 240 labor hours and 7 setups and consumed 15 percent of the product-sustaining activities. required: (a) had the company used labor hours as a company wide allocation base, how much overhead would it have allocated to the cutting shears? (b) how much overhead is allocated to the cutting shears using activity-based costing? (c) compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 780 units are produced. if direct product costs are $150 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system? (d) assuming that activity-based costing provides a more accurate estimate of cost, indicate whether the cutting shears would be over- or underpriced if direct labor hours are used as an allocation base. explain how over-or undercosting can affect vaulker's profitability. (e) comment on the validity of using the allocated facility-level cost in the pricing decision. should other costs be considered in a cost- plus pricing decision? if so, which ones? what costs would you include if you were trying to decide whether to accept a special order?