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Managerial Economics

Consumer Budget Constarint

Question 1. Page 154 (with some modifications) A consumer has $300 to spend on goods X and Y. The market prices of these two goods are Px = $15 and Py = $5. a. Draw the budget constraint. I.e. provide a carefully labeled diagram b. What is the market rate of substitution? Give an interpretation. c. Illustrate the consum

Food Stamp Program and Consumer's Budget Line

The U.S. government spends over $33 billion on its Food Stamp program to provide millions of Americans with the means to purchase food. These stamps are redeemable for food at over 160,000 store locations throughout the nation, and they cannot be sold for cash or used to purchase nonfood items. The average food stamp benefit i

Consumer's Opportunity Set

a) Consumers' opportunity set show the various combination of two good that are available given the amount of income and prices? Do you agree or disagree. Discuss b) Suppose all prices doubled and at the same time consumers' income also doubled, will this alter the consumer's opportunity set. If yes, explain. If no, explain

Economics multiple choice questions

1.The opportunity cost of receiving 100 dollars in the future as opposed to getting that 100 dollars today is: a.The foregone interest that could be earned if you had the money today. b.The taxes paid on any earnings. c.The value of $100 relative to the total income of that person. d.The value of $100 relative to the total

Economics: Demand and Supply Questions

1. If the interest rate is 5% and cash flows are $100 at the end of year one and $200 at the end of year two, then the present value of these cash flows is A. $256.20 B. $325.50 C. $439. D. 276.65 Show all work. The use of the time line is useful in explaining your answer. 2. If you put $2400 in a savings account a

Discussion questions on elasticity in economics

Short Discussion 1 * Name one good where your price elasticity of demand is greater than one (that is, your demand is elastic). If you were the manager of the company that sells this good, what considerations would you make before changing the price? * Name two goods where your cross-price elasticity of demand is greater than

Optimal Parameters in a Monopolistic Environment

QUESTION 1 Katrina's Candies is operating in the monopolistically competitive market structure and faces the following weekly demand and short-run cost functions: VC = 20Q+0.006665Q2 with MC=20 + 0.01333Q and FC = $5,000 P = 50-0.01Q and MR = 50-0.02Q *Where price is in $ and Q is in kilograms. All answers should be ro

Managerial Economics and Business Strategy

10) A worker views leisure and income as "goods" and has an opportunity to work at an hourly wage of $15 per hour. a Illustrate the worker's opportunity set in a given 24-hour period. b Suppose the worker is always willing to give up $11 of income for each hour of leisure. Do her preferences exhibit a diminishing marginal ra

Budget set, normal and inferior goods.

Managerial Economics and Business Strategy by Baye. Chapter 4 #6, 9 solution answer 6) In the following figure, a consumer is initially in equilibrium at point C. The consumer's income is $400, and the budget line through point C is given by $400 = $100X + $200Y. When the consumer is given a $100 gift certificate that is

Cost Management

You are a manager of a chemical company. An accident has occurred in which chemicals leaked into the ground water nearby. The community is unaware of the accident. 1. Compare the primary costs involved in cleaning up the water immediately (and thus confessing) versus hiding your culpability now and possibly paying more in the

Various managerial economics exercises

Question 1. Southwest Airlines begins a "Bags Fly Free" campaign, charging no fees for a first and second checked bag. Does this situation best represent a) Producer-producer rivalry? b) Consumer-consumer rivalry? c) Producer-consumer rivalry? Explain your choice. Question 2 What is the maximum amount you would pa


Part 1: •Is the advice, "Know your customer" a management strategy or economic concept or both? Explain. •How can managers use economic concepts to manage more strategically? Give three specific examples. •How does making tradeoffs apply to business management? Discussion: • Consider illegal immigration. How would

Supply and Demand

Examine the key factors affecting the demand for and the supply of a good for a candy company selling sugar-free candy. Distinguish between a change in demand and a change in the quantity demanded (movement along the demand curve). From the above, indicate the factors that are responsible for a shift in demand; and explain ho

Calculating HHI and Concentration Ratio

Need help with homework assignment. Submit in word document. An industry consists of three firms with sales of $300,000, $700,000, and $250,000. a. Calculate the Herfindahl-Hirschman index (HHI). b. Calculate the four-firm concentration ratio. c. Do you think the Department of Justice would attempt to block a h

Analyzing the Explicit and Implicit Costs

1. It is estimated that over 100,000 students will apply to the top 30 M.B.A. programs in the United States this year. a. Using the concept of net present value and opportunity cost, explain when it is rational for an individual to pursue an M.B.A. degree. b. What would you expect to happen to the number of applicants if the

Finding the Markup and Optimal Output Levels

I need some help in answering these two questions: 1. An airplane manufacturer has annual fixed costs of $50 million. Its variable cots are expected to be $2 million per plane. If the manufacturer wants to earn a 10 percent rate of return on its investment of $400 million and expects to produce 100 aircraft this year, what wil

Managerial Econ: Marginal Revenue Cost of Labor/Price Elasticity

7. Problem-solving question: Use the following data for a firm's output at various levels of employment (L) to calculate: a) its marginal physical product of labor (MPPL) schedule; (b) its (MPPL/MRCL) schedule, given a fixed wage (W = MRCL) of $25 per hour per worker. (c) Assuming that capital (K) is held constant at 2 machin

Loans vs. bank notes

XYZ Corporation is experiencing an average collection period of 120 days. The industry average is about 75 days. The firm has also experienced an increase in its business in the last 2 years and has been buying more inventory. The management wants to increase the amount of permanent inventory stock, and projects an increase in t

Find the optimal level of output.

Output Average Fixed cost Average Variable Cost Average Total Cost Marginal Cost Price Total Revenue Marginal Revenue 0 $ 345.00 1 $ 180.00 $ 135.00

Mix of labour and capital given a production function

Suppose a firm assumes the following production function: Q = 100 K.5 L1 . Currently, the firm hires 1,000 workers and employs 100 units of capital. The "wage" of capital and labor are $50 and $300 respectively. a. How many units will the firm be producing? b. If the marginal product of capital is 500 while that for lab

financial need help with understanding this problem

1) Which of these items are relevant to Ortiz's decision about which of these products it will launch? The following items are relevant to Ortiz's decision: additional development costs, unit-level costs, bath-level costs and product live cycle. The two items that are not relevant to the decisions are the research and developm

Calculating CAPM Using Excel

A company paid a dividend last year of $3.25, which is expected to grow at a constant rate of 7%. It has a beta of 1.5 and their stock is currently selling for $62. If the market risk premium is 6% and the risk-free rate is 3%, should you purchase this company stock? Why or Why not? Show by comparing the current selling price

Cash Flow Outflows and Net Present Values

Please help me with these accounting problems. The solution involves solving cash outflows and net present values. It also involves that calculations of present value indexes.

Managerial Economics - Reserve Prices & Extended Warranties

A. Reserve Prices A reserve price is a minimum price set by the auctioneer. If no bidder is willing to pay the reserve price, the item is unsold at a profit of $0 for the auctioneer. I f only one bidder values the item at or above the reserve price, that bidder pays the reserve price. An auctioneer faces two bidders, each with

Online vs. Paper Catalogs

Now that many businesses have upgraded to an online platform, are paper catalogs a thing of the past? Let's look at this from both sides of the table, both the consumer and the manager. Would you rather have an online or a paper catalog? What are the advantages and disadvantages of each.

Individual contributions that could be made by a cross-functional team

Discuss the individual contributions that could be made by a cross-functional team to the following list of activities. Assume the team consists of engineering, manufacturing, and supply management personnel. a. Specifications Development b. Market Analysis c. Productivity/cost improvements d. Make or buy analysis e. Det

Champagne Economics

It's Friday night, and you are just about to leave your room to attend a party. However, a copy of the New York Times catches your eye. More specifically, there's an article about champagne. The article describes a successful marketing campaign by the champagne industry that changed consumers' tastes for champagne. The article n

Compensation Plans in Car Dealerships

Two months ago, the owner of a car dealership (and a current football star) significantly changed his sales manager's compensation plan. Under the old plan, the manager was paid a salary of $6000 per month: under the new plan she receives 2 percent of the sales price of each car sold. During the past two months, the number of ca