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# Macroeconomics

### R-Square Value

R2 is a statistical measure which: a) determines how important one variable is in explaining the value of another variable b) tests the true value of a variable c) determines how well an equation can estimate the relationship between one variable and a set of other variables d) all of the above e) none of the above Whi

### Two-part tariffs and underage drinkers

The Rusty Anchor Bar has 2 types of patrons: legal and underage drinkers. Even though it is illegal to allow entry to underage drinkers, there is no perfect way to identify underage drinkers since they often use fake identification cards. The penalty for serving underage drinkers is severe - the bar could lose its license. Ass

### Price Individual Demands

Two consumers, Consumer 1 and Consumer 2, purchase the same product. They have the following demand curves: Q1 = 500 - 10 P and Q2 = 500 - 20 P. MC for the firm is \$10. (a) Calculate the prices that should be charged to each customer if the seller is able to use first degree price discrimination. (b) Is this a good

### Net Marginal Revenue

A firm should increase advertising if the net marginal revenue derived is: equal to the marginal cost of advertising. greater than the marginal cost of advertising. greater than zero. less than the marginal cost of advertising.

### Factors that Drive Fluctuations in Market Prices

If you were to pick the single most important factor that drives the fluctuation in the short term stock market prices, what would that factor be, and why do you think that it is the chief factor that drives short term fluctuations?

### Economics - Cost Function

High-Low Method Manchester Foundry produced 45,000 tons of steel in March at a cost of \$1,150,000. In April, the foundry produced 35,000 tons at a cost of \$950,000. Using only these two data points, determine the cost function for Manchester.

### Computing marginal propensity to consume

A country's disposable personal income in 2004 was \$100 billion, and \$80 billion of that was used as consumption. What is the country's marginal propensity to consume (mpc), which is expressed by the ratio of consumption to income?

### Economics: Determining Perceived Value

How do people judge whether prices are too low, too high or fair? As a consumer how do you determine perceived value? What factors do you consider when decided to purchase a product from one company versus another company? How do you determine perceived value when deciding to purchase a service from one company versus anothe

### Profitability Index Project

Year Project A Project B 0 -\$200 -200 1 82 100 2 80 100 3 80 100 4 80 Question 6: Profitability Index - If the opportunity cost of capital is 11 percent, what is the profitability index for each project? Does the profitability index rank the project incorrectly?

### Opportunity cost (macroeconomics)

Atlantis is a small, isolated island in the South Atlantic. The inhabitants grow potatoes and catch fresh fish. The accompanying table shows the maximum annual output combinations of potatoes and fish that can be produced. Obviously, given their limited resources and available technology, as they use more of their resources

### Positive and Negative Event

Can you pick one positive and one negative example of events in your area, the state, the country or the world that might impact our life, careers or professions. Please explain the impact and how you might deal with the consequences of each event. Thank you

### Firms in a Oligopolistic industry

Consider two strategically dependent firms in an oligopolistic industry: Firm A and Firm B. Firm A knows that if it offers extended warranties on its products but Firm B does not, it will earn \$6 million in profits, and Firm B will earn \$2 million. Likewise, Firm B knows that if it offers extended warranties but Firm A does not,

### American Managers and ethical decline in the US

Do you believe that there are certain common characteristics or traits of American managers that have led to moral or ethical decline in US business over recent years and thus business scandals? If so, what are these characteristics and why do you think they are prevalent in US business and not other countries' business culture

### Calculate Sprivate in an Open Economy

Question states: Assume the economy is open given: X=\$125 million IM-\$80 million Sgovernment= -200 million I=350 million calculate Sprivate

### Monoploy and Monopolistic Competition

If the Rhine Company ignores the possibility that other firms may enter its market, it should set a price of \$10,000 for its product, which is a power tool. But, if it does so, other firms will begin to enter the market. During the next two years, it will earn \$4 million per year, but in the following the next two years, it wi

### Calculating Price Index for text books

Eastland College is concerned about the rising price of textbooks that students must purchase. To better identify the increase in the price of textbooks, the dean asks you, the Economics Department's star student, to create an index of textbook prices. The average student purchases three English, two math, and four economics

### Economics - Maximum Profit Problem

A steel producer has the following total cost: TC = \$187,500 + \$5Q + \$0.0003Q^2. Q = tons of steel produced per month. Calculate the firm's maximum profit if steel price is stable at \$20 ton.

### Surplus: Supply of Meals at Five-Star Restaurants

See the attached problem.

### Third degree price discrimination - senior citizen versus. rest

A movie theater has estimated that the demand for a movie ticket can be written as P1 = 10 - Q1 for senior citizens and P2 = 12 - Q2 for the rest of the customers. The marginal cost of a movie ticket is \$1. If the movie theater practices third-degree price discrimination, what prices will be charged? A. Senior citizens pay \$

### Two part pricing - annual membership and rental

A local surf store estimates that their average customer's demand per year is P = 3.5 - 0.5Q, and knows that the marginal cost of each rental is \$0.5. a- How much should the store charge for an annual membership in order to extract all the consumer surplus using an optimal two-part pricing strategy? b- How much should t

### Demand Analysis & Estimation - Optimal Pricing - Oaktown

In effort to reduce excess end-of-the-model-year inventory, Oaktown Ford offered a 1% discount off the average price of 4WD Escape gas-electric hybrid SUV's sold during the month of August. The response was wildly enthusiastic, with unit sales rising by 10% over the previous month's level. 1) Calculate the point price elastic

### Decision Analysis: Mark Martinko has been a class A racquetball payer for the past five years, and one of his biggest goals is to own and operate a racquetball facility. Unfortunately, Market thinks that the change of a successful racquetball facility is only 30%. Mark's lawyer has recommended that he employ one of the local marketing research groups to conduct a survey concerning the success or failure of a racquetball facility. There is a 0.8 probability that the research will be favorable given a successful racquetball facility. In addition, there is a 0.7 probability that the research will be unfavorable given an unsuccessful facility. Compute revised probabilities of a successful racquetball facility given a favorable and given an unfavorable survey.

Mark Martinko has been a class A racquetball payer for the past five years, and one of his biggest goals is to own and operate a racquetball facility. Unfortunately, Market thinks that the change of a successful racquetball facility is only 30%. Mark's lawyer has recommended that he employ one of the local marketing research gro

### Gross Federal Debt

Is it possible for the gross federal debt to rise in dollar terms but decline as a percentage of GDP? Explain. I read that it can, and that it is due to an expanding economy, inflation, businesses and households borrowing \$ to buy plants/equipment and homes/consumables, however I do not understand how these reasons are relate

### Break-even point variables

C = 500 + .75Y Breakeven occurs where Y = ? Given: C = consumption Y = disposable income Y = C at breakeven

### Income Elasticity for Staple Foods

The income elasticity for most staple foods, such as wheat, is known to be between zero and one. a. As incomes rise over time, what will happen to the demand for wheat? b. What will happen to the quantity of wheat purchased by consumers? c. What will happen to the percentage of their budgets that consumers spend on wheat?

### The main factor that explains the difference between accounting cost and economic cost is?

Q) The main factor that explains the difference between accounting cost and economic cost is? A)opportunity cost? B)Fixed cost? C)Variable cost? D)Or all of the above(and why?)

### MR

When a firm is able to set its price, its price will always be less than its MR. Is this true or false and why??

### Present Worth for MARR

A firm wants to lease some land from you for 20 years and build a warehouse on it. As your payment for the lease, you will own the warehouse at the end of the 20 years. If the salvage value is estimated to be worth \$20,000 then, what is the PW (Present Worth) assuming a MARR of 10%?

### Gross Domestic Product.

Nominal GDP in a country was \$8,759.9 billion in 2003 and \$9,254.6 billion in 2004. The price index was 102.86 for 2003 and 104.37 for 2004. (a) What was the growth rate of nominal GDP between 2003 and 2004? (b) What was the inflation rate from 2003 to 2004? (c) What was the growth rate of real GDP between 2003 and 2004?