HW#4_AGEC1113_Sp23
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Oklahoma State University *
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Course
1113
Subject
Economics
Date
Feb 20, 2024
Type
docx
Pages
2
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Name
AGEC 1113
Homework #4 -Total 20 points
Chapter 4: Profit Maximization
Due: Thursday, Feb 23 by midnight (upload as pdf or jpeg or word file)
1.
Complete the table (0.5 pts per cell= total 8pts).
Assume the price of feed is $22 per bag and the price of beef is $6 per pound. Use the completed table to answer the questions on the next page.
Note units:
Px = $22 per bag, where X is input of feed in bags; and
Py = $6 per lb, where Y is output in beef in lbs
X (feed in
bags)
Y (beef in
lbs)
TRP
TFactorC
Profit
MRP
MFC
0
0
1
5
2
15
3
30
4
40
5
44
6
42
7
40
8
38
a.
What is the equation to compute profit in this table? (1 point)
b.
What level of feed produces the largest TPP? (1 point)
c.
What level of input yields the largest profit value? (1 point)
d.
Use the values of marginal revenue product and marginal factor cost to determine the optimal input level.
The optimal number of bags of feed occurs when moving to
bags of feed. (1 point)
2.
Use the graph below to answer the questions that follow (total 8 pts.):
($ / Y)
a.
What is the full name of curve A (no abbreviations)? (1 point)
b.
What is the full name of line B (no abbreviations)? (1 point)
c.
What label should be on the horizontal axis at point E (no abbreviations)? (1 point)
d.
What is MFC equal to?
(1 point)
P
X
or
P
Y
e.
Which point is the profit-maximizing level?
(1 point)
C
or
D
f.
State the two-part rule used to find the answer in part e. (1 point)
g.
On the graph above, draw in a new higher input price and show the new profit-maximizing level. Label the new optimal level of input X*. Is the new optimal input level higher or lower than your answer in part e? (2pts.)
A
B
C
D
E
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Related Questions
On the following graph, use the green point (triangle symbol) to plot the weekly total revenue when the market price is $30, $45, $60, $75, $90,
$105, and $120 per scooter.
TOTAL REVENUE (Dollars)
1460
1320
1180
1040
900
760
620
480
340
200
+
0 15 30
45 60 75 90 105 120 135 150 165 180 195
PRICE (Dollars per scooter)
Total Revenue
?
According to the midpoint method, the price elasticity of demand between points A and B is approximately
Suppose the price of scooters is currently $45 per scooter, shown as point B on the initial graph. Because the demand between points A and B is
▼, a $15-per-scooter increase in price will lead to
in total revenue per week.
In general, in order for a price increase to cause a decrease in total revenue, demand must be
arrow_forward
On the following graph, use the green point (triangle symbol) to plot the weekly total revenue when the market price is $50, $75, $100, $125, $150,
$175, and $200 per scooter.
TOTAL REVENUE (Dollars)
2610
2430
2250
2070
1890
1710
1530
1350
1170
990
Δ
ΔΔ
Δ
0 25 50 75 100 125 150 175 200 225 250 275 300 325
PRICE (Dollars per scooter)
Total Revenue
?
According to the midpoint method, the price elasticity of demand between points A and B is approximately 0.69 ▼
Suppose the price of scooters is currently $125 per scooter, shown as point A on the initial graph. Because the demand between points A and B is
inelastic
, a $25-per-scooter decrease in price will lead to a decrease in total revenue per week.
arrow_forward
Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve.
Note: You will not be graded on any changes made to this graph.
PRICE (Dollars per scooter)
325
300
275
250
225
200
175
150
125
100
75
50
25
0
09 18 27
A
+
36 45 54 63 72 81
QUANTITY (Scooters)
B
Demand
90
90 99 108 117
Total Revenue
?
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Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve.
Note: You will not be graded on any changes made to this graph.
PRICE (Dollars per scooter)
TOTAL REVENUE (Dollars)
195
180
165
910
150
1130
800
1020
090
135
580
120
470
105
360
On the following graph, use the green point (triangle symbol) to plot the weekly total revenue when the market price is $30, $45, $60, $75, $90,
$105, and $120 per scooter.
250
75
140
60
45
30
15
0
Demand
03 6 9 12 15 18 21 24 27 30 33 36 39
QUANTITY (Scooters)
0 15 30 45
Total Revenue
60 75 90 105 120 125 150 165 180 195
PRICE (Dollars per scooter)
A
Total Revenue
?
(?)
According to the midpoint method, the price elasticity of demand between points A and B is approximately
Suppose the price of scooters is currently $30 per scooter, shown as point B on the initial graph. Because the demand between points A and B is
in total revenue per week.
a $15-per-scooter increase in price will lead to
In general,…
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In January 2020, Starbucks raised their beverage prices by an average of1% across the U.S, a move that represented the company’s firstsignificant price increase in 18 months. I failed to notice because the pricechange didn’t affect grande or venti (medium and large) brewed coffeesand I don’t mess with smaller sizes, but anyone who purchases tall size(small) brews saw as much as a 10 cent increase. The company’s thirdquarter revenue rose 25% to $417.8 million from $333.1 million a yearearlier, and green coffee prices have plummeted, so what gives?Starbucks claims the price increase is due to rising labor and non-coffeecommodity costs, but with the significantly lower coffee costs alreadyimproving their profit margins, it seems unlikely this justification is the truereason for the hike in prices. In addition, the price hike was applied to lessthan a third of their beverages and only targets certain regions. Implementingsuch a specific and minor price…
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The following table shows the demand and supply of tickets of a football game which will be held at Shah Alam Stadium.
Unit Price (RM)
Market Demand (units)
Market Supply (units)
20
5000
3500
40
4000
3500
60
3000
3500
80
2000
3500
100
1000
3500
a) On your foolscap paper, draw the demand and supply curves. Label all axes, all curves and the equilibrium point. (6m)
b) How much is the equilibrium price and equilibrium quantity? (2m)
c) At which price will there be a surplus of 2500 tickets? (1m)
d) What will happen when the market price is RM40? Show your answer on the same diagram. (3m)
e) Why is the supply of tickets fixed at 3500? (1m)
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Please help me answer the following question in the attachment. Thank you.
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please do the graphs and the questions below
the choices for the following are
Sean 1. (should, should not) increase production from 4 to 5 fire engines, because the 2.( output effect, price effect) dominates in this scenario.
thankyou!!!!
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Price
8
7
6
5
4
3
2
1
110
220
330
440
550
660
Quantity per month
770
880
D
-(935, 0.5
990
Tools
D₂
2
S2
с
Suppose that in December the demand of mandarin oranges increases by 275 while the supply increases by 110.
a) Draw the new curves D2 and S2 in graph above. Plot only the endpoints of the curve above and position those points on the edges
of the graphing area.
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2. The relationship between price and demand per month for a consumer product is
p = 3500 -1.1D5
where p is the price per unit in dollars and D is the demand in units. The fixed cost is $300 per
month and the variable cost is $4.00 per unit.
What is the optimal number of units that should be produced and sold per month?
a.
b. What is the maximum profit per month?
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The following graph shows the monthly demand and supply curves in the market for combs.
Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.
Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
PRICE (Dollars per comb)
528 && 28
72
64
56
48
40
16
Supply
Demand
0 50 100 150 200 250 300 350 400 450 500
QUANTITY (Combo)
Graph Input Tool
Market for Combs
Price
(Dollars per comb)
Quantity
Demanded
(Combs)
24
500
Quantity Supplied
(Combs)
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6. Elasticity and total revenue I
The following graph shows the daily demand curve for bippitybops in Vancouver.
On the following graph, use the green rectangle (triangle symbols) to shade the area representing total revenue at various prices along the demand
curve. Notice that when you click on the rectangle, the area is displayed.
Note: You will not be scored on any changes made to this graph.
PRICE (Dollars per bippitybop)
240
220
200
180
160
140
120
100
80
60
40
20
0
0
6
12
**
+
48
B
18 24 30 36
QUANTITY (Bippitybops per day)
Demand
54 80
72
Total Revenue
?
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The following graph illustrates the weekly demand curve for motorized scooters in Madison.
Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve.
Note: You will not be graded on any changes made to this graph.
PRICE (Dollars per scooter)
325
300
275
250
225
200
175
150
125
100
75
50
25
0
0 10
A
+
20 30
X
B
Demand
40 50 60 70 80
QUANTITY (Scooters)
90 100 110 120 130
Total Revenue
?
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In 2020, the annual wage "ceiling" for workers aged 62-64 was $18,240
How large of a monthly Social Security check would a 63-year-old retiree get if her maximum benefit is $1,300 per month and she
continues working for wages of $2,200 per month? (Use the equation below to answer this question.)
Annual benefit amount Maximum award-0.5(Wage > $18,240)
Instructions: Enter your response as a whole number.
per month
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Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding
production to two or even three factories. The following table shows the company's short-run average total cost (SRATC) each month for various levels
of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.)
Number of Factories Q = 100
1
2
3
78°F
Sunny
440
620
800
F2
Q = 200
F3
280
380
480
O
Average Total Cost
(Dollars per bike)
Q = 300 Q = 400
240
240
320
F4
320
240
240
Suppose Ike's Bikes is currently producing 100 bikes per month in its only factory. Its short-run average total cost is $
F5
Q = 500
480
Suppose Ike's Bikes is expecting to produce 100 bikes per month for several years. In this case, in the long run, it would choose to produce bikes
using
On the following graph, plot the three SRATC curves for Ike's Bikes from the previous table. Specifically, use the…
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See below please.
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Task 2 - Below is a hypothetical demand and supply for apartments. Answer
the following questions below using as basis the schedule given:
Number of Apts.
Number of Apts.
Supplied/Month
Rent/Month
(Php)
Demanded/Month
1
120,000
200
100,000
20,000
400
80,000
40,000
600
60,000
60,000
800
40,000
80,000
1000
20,000
100,000
1200
120,000
1. Draw the demand and supply curves for apartments using the schedule above.
2. What is the equilibrium rent per month? At this rent, what is the number of
apartments demanded and supplied per month?
3. At P400 rent per month what will be the demand and supply of apartments? Will
there be a surplus or shortage of supply? Explain your answer.
4. At 800 rent per month what will be the demand and supply of apartments? Will
there be a surplus or shortage of supply? Explain your answer.
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We have the results from our first Facebook ad campaign. The following table summarizes the
results broken down by age and whether the person seeing the add clicked through.
Age 40 or under
85
Age more than 40
65
Total
Clicked Through
150
Did Not Click
590
260
850
Total
675
325
1000
For our up(combing) (pun intended) campaign, I want to make it as effective as possible, a cut
above all other ad campaigns! I'm thinking that since 85 (or 56.7%) of the 150 people who
clicked through to our website are age 40 or less, we should focus our ads to only younger
people. I'm not great with number though, and since I know you had a stats class in college, I
wanted to get your opinion. Should we focus our adds only to those age 40 and under or should
we do something else?
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Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.
Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
PRICE (Dollars per room)
500
450
400
350
300
250
200
150
100
50
0
1
1
T
Demand
0 50 100 150 200 250 300 350 400 450 500
QUANTITY (Hotel rooms)
Graph Input Tool
Market for Big Winner's Hotel Rooms
Price
(Dollars per room)
Quantity
Demanded
(Hotel rooms per
night)
Demand Factors
Average Income
(Thousands of
dollars)
Airfare from LAX to
LAS
(Dollars per
roundtrip)
Room Rate at Lucky
(Dollars per night)
200
300
50
100
250
For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Big Winner is charging $200 per
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Pilar’s taco trucks sells about $600 various tacos per day for an average price of $6. On average, each tacos cost $3 (includes labor, materials and miscellaneous), Pilar’s profit margin is ________.
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Assume that the price of coffeee goes up. Will that impact the demand for tea??? Show me what will happen by using appropriate diagram(s)
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Task 3
Pick one of your items. You have been contacted by a customer in Alaska who
wants to purchase several of these items and wants you to ship the items to her.
You have already established the cost per item and you will only charge the
customer $5 to ship these items to Alaska. Suppose another company sells the
same item but charges half of your price. However, if the customer buys from this
company, she will be charged $20 in shipping costs.
a. Write two equations to represent the customer's total cost based on how
many items she buys from each of the two sellers-you and the other
company.
b. If the customer in Alaska wants to buy 5 items, from whom should she buy?
Explain your answer.
c. If the customer in Alaska wants to buy 50 items, from whom should she buy?
Explain your answer.
d. Solve the system of equations from part A. What method did you choose to
solve the system? Why?
e. Explain what your solution for part D means in terms of the situation.
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The following graph shows the monthly demand and supply curves in the market for tote bags.
Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.
Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
PRICE (Dollars per tote bag)
80
72
64
58
48
40
32
24
16
8
0
X
0 50 100 150 200 250
QUANTITY (Tote bags)
Supply
300 350 400 450 500
The equilibrium price in this market is $
Demand
Graph Input Tool
Market for Tote bags
Price
(Dollars per tote
bag)
Quantity
Demanded
(Tote bags)
per tote bag, and the equilibrium quantity is
Price
(Dollars per tote bag) Shortage or Surplus
48
32
24
Shortage or Surplus Amount
(Tote bags)
500
Quantity Supplied
(Tote bags)
Pressure
tote bags per month.
Complete the following table by indicating at each price whether there is a shortage or surplus in the market, the amount of that shortage or surplus,
and whether…
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The graph below shows the market for mandarin oranges in Odin for the month of November (in thousands of kilos).
1
6
5
X
4
3
2
450
750 10501200¹ 1350
300
600
900
Quantity per month
Price
8
7
DS
0 150
Tools
D₂
S2
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Related Questions
- On the following graph, use the green point (triangle symbol) to plot the weekly total revenue when the market price is $30, $45, $60, $75, $90, $105, and $120 per scooter. TOTAL REVENUE (Dollars) 1460 1320 1180 1040 900 760 620 480 340 200 + 0 15 30 45 60 75 90 105 120 135 150 165 180 195 PRICE (Dollars per scooter) Total Revenue ? According to the midpoint method, the price elasticity of demand between points A and B is approximately Suppose the price of scooters is currently $45 per scooter, shown as point B on the initial graph. Because the demand between points A and B is ▼, a $15-per-scooter increase in price will lead to in total revenue per week. In general, in order for a price increase to cause a decrease in total revenue, demand must bearrow_forwardOn the following graph, use the green point (triangle symbol) to plot the weekly total revenue when the market price is $50, $75, $100, $125, $150, $175, and $200 per scooter. TOTAL REVENUE (Dollars) 2610 2430 2250 2070 1890 1710 1530 1350 1170 990 Δ ΔΔ Δ 0 25 50 75 100 125 150 175 200 225 250 275 300 325 PRICE (Dollars per scooter) Total Revenue ? According to the midpoint method, the price elasticity of demand between points A and B is approximately 0.69 ▼ Suppose the price of scooters is currently $125 per scooter, shown as point A on the initial graph. Because the demand between points A and B is inelastic , a $25-per-scooter decrease in price will lead to a decrease in total revenue per week.arrow_forwardUse the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve. Note: You will not be graded on any changes made to this graph. PRICE (Dollars per scooter) 325 300 275 250 225 200 175 150 125 100 75 50 25 0 09 18 27 A + 36 45 54 63 72 81 QUANTITY (Scooters) B Demand 90 90 99 108 117 Total Revenue ?arrow_forward
- Use the green rectangle (triangle symbols) to compute total revenue at various prices along the demand curve. Note: You will not be graded on any changes made to this graph. PRICE (Dollars per scooter) TOTAL REVENUE (Dollars) 195 180 165 910 150 1130 800 1020 090 135 580 120 470 105 360 On the following graph, use the green point (triangle symbol) to plot the weekly total revenue when the market price is $30, $45, $60, $75, $90, $105, and $120 per scooter. 250 75 140 60 45 30 15 0 Demand 03 6 9 12 15 18 21 24 27 30 33 36 39 QUANTITY (Scooters) 0 15 30 45 Total Revenue 60 75 90 105 120 125 150 165 180 195 PRICE (Dollars per scooter) A Total Revenue ? (?) According to the midpoint method, the price elasticity of demand between points A and B is approximately Suppose the price of scooters is currently $30 per scooter, shown as point B on the initial graph. Because the demand between points A and B is in total revenue per week. a $15-per-scooter increase in price will lead to In general,…arrow_forwardREAD THEN ANSWER THE QUESTION : In January 2020, Starbucks raised their beverage prices by an average of1% across the U.S, a move that represented the company’s firstsignificant price increase in 18 months. I failed to notice because the pricechange didn’t affect grande or venti (medium and large) brewed coffeesand I don’t mess with smaller sizes, but anyone who purchases tall size(small) brews saw as much as a 10 cent increase. The company’s thirdquarter revenue rose 25% to $417.8 million from $333.1 million a yearearlier, and green coffee prices have plummeted, so what gives?Starbucks claims the price increase is due to rising labor and non-coffeecommodity costs, but with the significantly lower coffee costs alreadyimproving their profit margins, it seems unlikely this justification is the truereason for the hike in prices. In addition, the price hike was applied to lessthan a third of their beverages and only targets certain regions. Implementingsuch a specific and minor price…arrow_forwardREAD THEN ANSWER THE QUESTION : In January 2020, Starbucks raised their beverage prices by an average of1% across the U.S, a move that represented the company’s firstsignificant price increase in 18 months. I failed to notice because the pricechange didn’t affect grande or venti (medium and large) brewed coffeesand I don’t mess with smaller sizes, but anyone who purchases tall size(small) brews saw as much as a 10 cent increase. The company’s thirdquarter revenue rose 25% to $417.8 million from $333.1 million a yearearlier, and green coffee prices have plummeted, so what gives?Starbucks claims the price increase is due to rising labor and non-coffeecommodity costs, but with the significantly lower coffee costs alreadyimproving their profit margins, it seems unlikely this justification is the truereason for the hike in prices. In addition, the price hike was applied to lessthan a third of their beverages and only targets certain regions. Implementingsuch a specific and minor price…arrow_forward
- READ THEN ANSWER THE QUESTION : In January 2020, Starbucks raised their beverage prices by an average of1% across the U.S, a move that represented the company’s firstsignificant price increase in 18 months. I failed to notice because the pricechange didn’t affect grande or venti (medium and large) brewed coffeesand I don’t mess with smaller sizes, but anyone who purchases tall size(small) brews saw as much as a 10 cent increase. The company’s thirdquarter revenue rose 25% to $417.8 million from $333.1 million a yearearlier, and green coffee prices have plummeted, so what gives?Starbucks claims the price increase is due to rising labor and non-coffeecommodity costs, but with the significantly lower coffee costs alreadyimproving their profit margins, it seems unlikely this justification is the truereason for the hike in prices. In addition, the price hike was applied to lessthan a third of their beverages and only targets certain regions. Implementingsuch a specific and minor price…arrow_forwardREAD THEN ANSWER THE QUESTION : In January 2020, Starbucks raised their beverage prices by an average of1% across the U.S, a move that represented the company’s firstsignificant price increase in 18 months. I failed to notice because the pricechange didn’t affect grande or venti (medium and large) brewed coffeesand I don’t mess with smaller sizes, but anyone who purchases tall size(small) brews saw as much as a 10 cent increase. The company’s thirdquarter revenue rose 25% to $417.8 million from $333.1 million a yearearlier, and green coffee prices have plummeted, so what gives?Starbucks claims the price increase is due to rising labor and non-coffeecommodity costs, but with the significantly lower coffee costs alreadyimproving their profit margins, it seems unlikely this justification is the truereason for the hike in prices. In addition, the price hike was applied to lessthan a third of their beverages and only targets certain regions. Implementingsuch a specific and minor price…arrow_forwardREAD THEN ANSWER THE QUESTION : In January 2020, Starbucks raised their beverage prices by an average of1% across the U.S, a move that represented the company’s firstsignificant price increase in 18 months. I failed to notice because the pricechange didn’t affect grande or venti (medium and large) brewed coffeesand I don’t mess with smaller sizes, but anyone who purchases tall size(small) brews saw as much as a 10 cent increase. The company’s thirdquarter revenue rose 25% to $417.8 million from $333.1 million a yearearlier, and green coffee prices have plummeted, so what gives?Starbucks claims the price increase is due to rising labor and non-coffeecommodity costs, but with the significantly lower coffee costs alreadyimproving their profit margins, it seems unlikely this justification is the truereason for the hike in prices. In addition, the price hike was applied to lessthan a third of their beverages and only targets certain regions. Implementingsuch a specific and minor price…arrow_forward
- The following table shows the demand and supply of tickets of a football game which will be held at Shah Alam Stadium. Unit Price (RM) Market Demand (units) Market Supply (units) 20 5000 3500 40 4000 3500 60 3000 3500 80 2000 3500 100 1000 3500 a) On your foolscap paper, draw the demand and supply curves. Label all axes, all curves and the equilibrium point. (6m) b) How much is the equilibrium price and equilibrium quantity? (2m) c) At which price will there be a surplus of 2500 tickets? (1m) d) What will happen when the market price is RM40? Show your answer on the same diagram. (3m) e) Why is the supply of tickets fixed at 3500? (1m)arrow_forwardPlease help me answer the following question in the attachment. Thank you.arrow_forwardplease do the graphs and the questions below the choices for the following are Sean 1. (should, should not) increase production from 4 to 5 fire engines, because the 2.( output effect, price effect) dominates in this scenario. thankyou!!!!arrow_forward
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