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Chapter 9—Applications of Cost Theory
MULTIPLE CHOICE
1. Evidence from empirical studies of short-run cost-output relationships lends support to the:
2. The short-run cost function is:
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Chapter 9—Applications of Cost Theory
MULTIPLE CHOICE
1. Evidence from empirical studies of short-run cost-output relationships lends support to the:
2. The short-run cost function is:
Chapter 9—Applications of Cost Theory
MULTIPLE CHOICE
1. Evidence from empirical studies of short-run cost-output relationships lends support to the:
2. The short-run cost function is:
ECO 550 Effective Communication - tutorialrank.comBartholomew30
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Chapter 9—Applications of Cost Theory
MULTIPLE CHOICE
1. Evidence from empirical studies of short-run cost-output relationships lends support to the:
2. The short-run cost function is:
3. Theoretically, in a long-run cost function:
For more course tutorials visit
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Chapter 9—Applications of Cost Theory
MULTIPLE CHOICE
1. Evidence from empirical studies of short-run cost-output relationships lends support to the:
2. The short-run cost function is:
3. Theoretically, in a long-run cost function:
For more course tutorials visit
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Chapter 9—Applications of Cost Theory
MULTIPLE CHOICE
1. Evidence from empirical studies of short-run cost-output relationships lends support to the:
For more classes visit
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Chapter 9—Applications of Cost Theory
MULTIPLE CHOICE
1. Evidence from empirical studies of short-run cost-output relationships lends support to the:
2. The short-run cost function is:
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Chapter 9—Applications of Cost Theory
MULTIPLE CHOICE
1. Evidence from empirical studies of short-run cost-output relationships lends support to the:
2. The short-run cost function is:
Chapter 9—Applications of Cost Theory
MULTIPLE CHOICE
1. Evidence from empirical studies of short-run cost-output relationships lends support to the:
2. The short-run cost function is:
ECO 550 Effective Communication - tutorialrank.comBartholomew30
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Chapter 9—Applications of Cost Theory
MULTIPLE CHOICE
1. Evidence from empirical studies of short-run cost-output relationships lends support to the:
2. The short-run cost function is:
3. Theoretically, in a long-run cost function:
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Chapter 9—Applications of Cost Theory
MULTIPLE CHOICE
1. Evidence from empirical studies of short-run cost-output relationships lends support to the:
2. The short-run cost function is:
3. Theoretically, in a long-run cost function:
For more course tutorials visit
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Chapter 9—Applications of Cost Theory
MULTIPLE CHOICE
1. Evidence from empirical studies of short-run cost-output relationships lends support to the:
The Term “Oligopoly” has been derived from two Greek words.
Sources of Oligopoly
Huge capital investment
Economies of scale.
Patent rights
Control over certain raw materials
Merger and takeover.
Characteristics Of Oligopoly
Various forms of oligopoly
Oligopoly models
Models of Oligopoly
Cournot’s duopoly model
Sweezy’s kinked demand curve model
Price leadership models
Collusive models :The Cartel Arrangement
The Game Theory
Prisoner’s Dilemma
Price leadership Model
Collusive models The Cartel Arrangement
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# Students can earn better grades, save time and study effectively
Our Vision & Mission – Simplifying Students Life
Our Belief – “The great breakthrough in your life comes when you realize it, that you can learn anything you need to learn; to accomplish any goal that you have set for yourself. This means there are no limits on what you can be, have or do.”
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Chapter 9—Applications of Cost Theory
MULTIPLE CHOICE
1. Evidence from empirical studies of short-run cost-output relationships lends support to the:
2. The short-run cost function is:
3. Theoretically, in a long-run cost function:
4. Break-even analysis usually assumes all of the following except:
MBA 681 Economics for Strategic DecisionsPrepared by Yun Wan.docxalfredacavx97
MBA 681 Economics for Strategic Decisions
Prepared by Yun Wang
1. How does firm maximize profit.
2. Poduction decision in the perfect competitive market.
3. Production decision in monopolistic competitive market.
4. Production decision in oligopoly.
5. Production decision in monoply.
6. Two special models in oligopoly market.
1. How a Firm Maximizes Profit:
All firms try to maximize profits based on the following equation:
Profit = Total Revenue − Total Cost
The rules we have just developed for profit maximization are:
1. The profit-maximizing level of output is where the difference between total revenue and total
cost is greatest, and
2. The profit-maximizing level of output is also where MR = MC.
Notice: All of these rules do not require the assumption of market type; they are true for all
firms with different market structures (perfect competition, monopolistic competition,
oligopoly, monopoly)!
The Four Market Structures:Structures
Market Structure
Characteristic Perfect Competition
Monopolistic
Competition Oligopoly Monopoly
Type of product Identical Differentiated Identical or differentiated Unique
Ease of entry High High Low Entry blocked
Examples of
industries
Growing wheat
Poultry farming
Clothing stores
Restaurants
Manufacturing computers
Manufacturing automobiles
First-class mail delivery
Providing tap water
2. Profit Determination in Perfect Competitive Market:
A firm maximizes profit at
the level of output at which
marginal revenue equals
marginal cost.
The difference between
price and average total cost
equals profit per unit of
output.
Total profit equals profit per
unit of output, times the
amount of output: the area
of the green rectangle on the
graph.
In the graph on the left, price
never exceeds average cost,
so the firm could not possibly
make a profit.
The best this firm can do is to
break even, obtaining no
profit but incurring no loss.
The MC = MR rule leads us to
this optimal level of
production.
The situation is even worse
for this firm; not only can it
not make a profit, price is
always lower than average
total cost, so it must make
a loss.
It makes the smallest loss
possible by again following
the MC = MR rule.
No other level of output
allows the firm’s loss to be
so small.
Identifying Whether a Firm Can Make a Profit
Once we have determined the quantity where MC = MR, we can immediately know
whether the firm is making a profit, breaking even, or making a loss. At that quantity,
• If P > ATC, the firm is making a profit
• If P = ATC, the firm is breaking even
• If P < ATC, the firm is making a loss
Even better: these statements hold true at every level of output.
However, if the price is too low, i.e. below the minimum point of
AVC, the firm will produce nothing at all.
The quantity supplied is zero below this point.
3. Profit Determination in Monopolistic Competitive Market:
(1 of 3)
In the short run, a monopol.
Outline for Lecture 15Long-Run Production CostsThe Lon.docxgerardkortney
Outline for Lecture 15
Long-Run Production Costs
The Long-Run Cost Curve (five plant sizes)
Suppose that a firm can operate in five alternative plants in the short run, Plants 1 through 5, with respective short-run average total cost curves (ATC1 through ATC5) illustrated by Figure 9.7.
In this illustration, vertical white lines show levels of output at which firm should change its plant to achieve the lowest average total cost.
To see why, suppose that firm produces an output of less than 20 units, say 15 units. In this case, lowest average total cost is achieved in Plant 1 because ATC1 lies below all other ATC curves for 15 units. Provided that plant is a variable resource in the long run, firm chooses Plant 1, indicating that blue section of ATC1 is part of firm’s long-run average total cost curve for output levels below 20 units.
Now, suppose firm raises production to somewhere between 20 and 30 units, say 25 units. In this second case, lowest average total cost is achieved in Plant ____ because ____ lies below all other ATC curves for 25 units. Provided that plant is a variable resource in the long run, firm chooses Plant ____, indicating that blue section of ____ is part of firm’s long-run average total cost curve for output levels between 20 and 30 units.
Similarly, blue section of ____ is part of long-run average total cost curve for output levels between 30 and 50 units, blue section of ____ is part of long-run average total cost curve for output levels between 50 and 60 units, and blue section of ____ is part of long-run average total cost curve for output levels above 60 units.
Given these five cases illustrated by Figure 9.7, how do we obtain long-run average total cost curve? Is it smooth or bumpy? Explain.
The Long-Run Cost Curve (unlimited plant sizes)
The blue long-run average total cost curve in Figure 9.7 is drawn under the assumption that firm can operate in five alternative plants in the short run. However, in modern manufacturing industries (i.e. automobiles, pharmaceuticals, etc.) the number of possible plant sizes is many more than five.
In line with this reasoning, each red average total cost curve in Figure 9.8 represents a possible plant size in the short run.
Given all these red curves illustrated by Figure 9.8, how do we obtain long-run average total cost curve? Is it smooth or bumpy? Explain.
Economies and Diseconomies of Scale
Shape of long-run average total cost curve (Figures 9.8 and 9.9) is explained via economies and diseconomies of scale.
Economies of Scale
In the upper panel of Figure 9.9, economies of scale corresponds to ____ part of the curve; in the output range between zero and q1, average total cost ____ as production rises in the long run.
Explain economies of scale: why is average total cost decreasing with rising output?
Diseconomies of Scale
In the upper panel of Figure 9.9, diseconomies of scale explains ____ part of the curve; in the output range above than q2, avera.
The Term “Oligopoly” has been derived from two Greek words.
Sources of Oligopoly
Huge capital investment
Economies of scale.
Patent rights
Control over certain raw materials
Merger and takeover.
Characteristics Of Oligopoly
Various forms of oligopoly
Oligopoly models
Models of Oligopoly
Cournot’s duopoly model
Sweezy’s kinked demand curve model
Price leadership models
Collusive models :The Cartel Arrangement
The Game Theory
Prisoner’s Dilemma
Price leadership Model
Collusive models The Cartel Arrangement
FellowBuddy.com is an innovative platform that brings students together to share notes, exam papers, study guides, project reports and presentation for upcoming exams.
We connect Students who have an understanding of course material with Students who need help.
Benefits:-
# Students can catch up on notes they missed because of an absence.
# Underachievers can find peer developed notes that break down lecture and study material in a way that they can understand
# Students can earn better grades, save time and study effectively
Our Vision & Mission – Simplifying Students Life
Our Belief – “The great breakthrough in your life comes when you realize it, that you can learn anything you need to learn; to accomplish any goal that you have set for yourself. This means there are no limits on what you can be, have or do.”
Like Us - https://www.facebook.com/FellowBuddycom
ECO 550 STUDY Possible Is Everything / eco550study.comrock1234561
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Chapter 9—Applications of Cost Theory
MULTIPLE CHOICE
1. Evidence from empirical studies of short-run cost-output relationships lends support to the:
2. The short-run cost function is:
3. Theoretically, in a long-run cost function:
4. Break-even analysis usually assumes all of the following except:
MBA 681 Economics for Strategic DecisionsPrepared by Yun Wan.docxalfredacavx97
MBA 681 Economics for Strategic Decisions
Prepared by Yun Wang
1. How does firm maximize profit.
2. Poduction decision in the perfect competitive market.
3. Production decision in monopolistic competitive market.
4. Production decision in oligopoly.
5. Production decision in monoply.
6. Two special models in oligopoly market.
1. How a Firm Maximizes Profit:
All firms try to maximize profits based on the following equation:
Profit = Total Revenue − Total Cost
The rules we have just developed for profit maximization are:
1. The profit-maximizing level of output is where the difference between total revenue and total
cost is greatest, and
2. The profit-maximizing level of output is also where MR = MC.
Notice: All of these rules do not require the assumption of market type; they are true for all
firms with different market structures (perfect competition, monopolistic competition,
oligopoly, monopoly)!
The Four Market Structures:Structures
Market Structure
Characteristic Perfect Competition
Monopolistic
Competition Oligopoly Monopoly
Type of product Identical Differentiated Identical or differentiated Unique
Ease of entry High High Low Entry blocked
Examples of
industries
Growing wheat
Poultry farming
Clothing stores
Restaurants
Manufacturing computers
Manufacturing automobiles
First-class mail delivery
Providing tap water
2. Profit Determination in Perfect Competitive Market:
A firm maximizes profit at
the level of output at which
marginal revenue equals
marginal cost.
The difference between
price and average total cost
equals profit per unit of
output.
Total profit equals profit per
unit of output, times the
amount of output: the area
of the green rectangle on the
graph.
In the graph on the left, price
never exceeds average cost,
so the firm could not possibly
make a profit.
The best this firm can do is to
break even, obtaining no
profit but incurring no loss.
The MC = MR rule leads us to
this optimal level of
production.
The situation is even worse
for this firm; not only can it
not make a profit, price is
always lower than average
total cost, so it must make
a loss.
It makes the smallest loss
possible by again following
the MC = MR rule.
No other level of output
allows the firm’s loss to be
so small.
Identifying Whether a Firm Can Make a Profit
Once we have determined the quantity where MC = MR, we can immediately know
whether the firm is making a profit, breaking even, or making a loss. At that quantity,
• If P > ATC, the firm is making a profit
• If P = ATC, the firm is breaking even
• If P < ATC, the firm is making a loss
Even better: these statements hold true at every level of output.
However, if the price is too low, i.e. below the minimum point of
AVC, the firm will produce nothing at all.
The quantity supplied is zero below this point.
3. Profit Determination in Monopolistic Competitive Market:
(1 of 3)
In the short run, a monopol.
Outline for Lecture 15Long-Run Production CostsThe Lon.docxgerardkortney
Outline for Lecture 15
Long-Run Production Costs
The Long-Run Cost Curve (five plant sizes)
Suppose that a firm can operate in five alternative plants in the short run, Plants 1 through 5, with respective short-run average total cost curves (ATC1 through ATC5) illustrated by Figure 9.7.
In this illustration, vertical white lines show levels of output at which firm should change its plant to achieve the lowest average total cost.
To see why, suppose that firm produces an output of less than 20 units, say 15 units. In this case, lowest average total cost is achieved in Plant 1 because ATC1 lies below all other ATC curves for 15 units. Provided that plant is a variable resource in the long run, firm chooses Plant 1, indicating that blue section of ATC1 is part of firm’s long-run average total cost curve for output levels below 20 units.
Now, suppose firm raises production to somewhere between 20 and 30 units, say 25 units. In this second case, lowest average total cost is achieved in Plant ____ because ____ lies below all other ATC curves for 25 units. Provided that plant is a variable resource in the long run, firm chooses Plant ____, indicating that blue section of ____ is part of firm’s long-run average total cost curve for output levels between 20 and 30 units.
Similarly, blue section of ____ is part of long-run average total cost curve for output levels between 30 and 50 units, blue section of ____ is part of long-run average total cost curve for output levels between 50 and 60 units, and blue section of ____ is part of long-run average total cost curve for output levels above 60 units.
Given these five cases illustrated by Figure 9.7, how do we obtain long-run average total cost curve? Is it smooth or bumpy? Explain.
The Long-Run Cost Curve (unlimited plant sizes)
The blue long-run average total cost curve in Figure 9.7 is drawn under the assumption that firm can operate in five alternative plants in the short run. However, in modern manufacturing industries (i.e. automobiles, pharmaceuticals, etc.) the number of possible plant sizes is many more than five.
In line with this reasoning, each red average total cost curve in Figure 9.8 represents a possible plant size in the short run.
Given all these red curves illustrated by Figure 9.8, how do we obtain long-run average total cost curve? Is it smooth or bumpy? Explain.
Economies and Diseconomies of Scale
Shape of long-run average total cost curve (Figures 9.8 and 9.9) is explained via economies and diseconomies of scale.
Economies of Scale
In the upper panel of Figure 9.9, economies of scale corresponds to ____ part of the curve; in the output range between zero and q1, average total cost ____ as production rises in the long run.
Explain economies of scale: why is average total cost decreasing with rising output?
Diseconomies of Scale
In the upper panel of Figure 9.9, diseconomies of scale explains ____ part of the curve; in the output range above than q2, avera.
Chapter 13A monopolistically competitive market is characterized.docxketurahhazelhurst
Chapter 13
A monopolistically competitive market is characterized by:
· many buyers and sellers,
· differentiated products, and
· easy entry and exit.
The monopolistically competitive market is similar to perfect competition in that there are many buyers and sellers who can enter or leave the market easily in response to economic profits or losses. A monopolistically competitive firm, though, is similar to a monopoly in that it produces a product that is different from that produced by all other firms in the market. The restaurant market in New York City provides a good example of a monopolistically competitive market. Each restaurant has its own recipes, decor, ambiance, etc. but also must compete with many other similar restaurants.
Because each firm produces a differentiated product, it won't lose all of its customers if it raises its prices. Thus, a monopolistically competitive firm faces a downward sloping demand curve for its product. As noted in Chapters 8 and 10, whenever a firm faces a downward sloping demand curve, its marginal revenue curve lies below its demand curve. The diagram below illustrates the relationship that exists between a monopolistically competitive firm's demand and marginal revenue curves.
While the diagram above seems similar to the demand and marginal revenue curves facing a monopolist, there is a critical difference. In a monopolistically competitive market, the number of firms changes as firms enter or leave the industry. When new firms enter the market, the customers are spread over a larger number of firms and the demand for each firm's product declines. An increase in the number of firms also tends to result in an increase in the elasticity of demand for each firm's products (since demand is more elastic when more substitutes are available). The diagram below illustrates the shift in a typical firm's demand curve that occurs when additional firms enter a monopolistically competitive market.
Short-run and long-run equilibrium in monopolistically competitive markets
Let's examine the determination of short-run equilibrium in a monopolistically competitive output market.
The diagram below illustrates a possible short-run equilibrium for a typical firm in a monopolistically competitive market. As with any profit-maximizing firm, a monopolistically competitive firm maximizes its profits by producing at a level of output at which MR = MC. In the diagram below, this occurs at an output level of Qo. The price is determined by the amount that customers are willing to pay to buy Qo units of output. In the example below, the demand curve indicates that a price of Po will be charged when Qo units of output are sold.
In a monopoly industry, economics profits could persist indefinitely due to the existence of barriers to entry. In a monopolistically competitive industry, however, the existence of economic profits results in the entry of additional firms into the industry. As additional firms enter, the demand for each ...
1. In the perfectly competitive market, a firm’s marginal revenue .docxjackiewalcutt
1. In the perfectly competitive market, a firm’s marginal revenue (MR) is equal to:
its total cost
its marginal profit
the market price
its total revenue
2. The demand curve facing the firm in _________ is the same as the whole market demand curve.
perfect competition
monopolistic competition
oligopoly
monopoly
3. Individual cartel producers may find it advantageous to cheat on the agreements by increasing production,
if the other producers obey the agreements.
if every member cheats.
when the punishment on cheating is severe.
when the market demand is inelastic.
4. The profit-maximizing monopolist facing a negative-sloping demand curve will always produce
at an output greater than the output where average total costs are minimized.
at an output short of that output where average total costs are minimized.
at an output equal to industry output under perfect competition.
at an output short of that output where the profits are maximized.
5. The Lerner index, (P-MC)/P, might be an inappropriate measure for market power among firms in IT industry because
there are too many firms in the industry.
most firms charge a high price for their products.
all firms’ marginal costs are very low.
no firm has market power
6. In the long-run, a firm in a monopolistically competitive industry will
earn a positive economic profit
tend to just cover its total cost, maintaining a normal profit
charge a price equal to its marginal cost
become a monopoly
7. An average variable cost function is estimated as
AVC
= 96− 2Q + 0.05Q2
When Q=100, the average variable cost is _________.
rising
falling
unknown.
greater than $400
8. In the short-run for a perfectly competitive market, a manufacturer will stop production when:
the total revenue is less than total costs
the contribution cannot cover any fixed costs
the price is greater than AVC
operating at a negative economic profit
9. Refer to the following table showing the total cost schedule for a perfectly competitive firm:
Q
TC ($)
0
20
1
45
2
65
3
100
4
145
5
195
If market price is $40, how many units of output will the firm produce for profit-maximization?
2 units of output
3 units of output
4 units of output.
5 units of output.
2.5 points
10. Refer to the following table showing the total cost schedule for a perfectly competitive firm:
Q
TC ($)
0
20
1
45
2
65
3
100
4
145
5
195
If market price is $40, what is the maximum profit the firm can earn?
$15
$20
$25
$30
11. Refer to the following table showing the total cost schedule for a perfectly competitive firm:
Q
TC ($)
0
20
1
45
2
65
3
100
4
145
5
195
If market price is $20, how many units of output will the firm produce?
0, the firm shuts down.
1
2
3
12. Refer to the following table showing the total cost schedule for a perfectly competitive firm:
Q
TC ($)
0
20
1
45
2
65
3
100
4
145
5
195
...
A market can be defined as a group of firms willing and able to sell a similar product or service to the same potential buyers.
Imperfect competition covers all situations where there is neither pure competition nor pure monopoly.
Perfect competition and pure monopoly are very unlikely to be found in the real world.
In the real world, it is the imperfect competition lying between perfect competition and pure monopoly.
The fundamental distinguishing characteristic of imperfect competition is that average revenue curve slopes downwards throughout its length, but it slopes downwards at different rates in different categories of imperfect competition.
Monopoly refers to the market situation where there is a
Single seller selling a product which has no close substitutes.
Monopolies are characterized by a lack of economic competition to produce the good or service, a lack of viable substitute goods, and the existence of a high monopoly price well above the firm's marginal cost that leads to a high monopoly profit
The word “oligopoly” comes from the Greek “oligos” meaning "little or small” and “polein” meaning “to sell.” When “oligos” is used in the plural, it means “few” ,few firms or few sellers.
DEFINATION:
Oligopoly is that form of market where there are few firms and there is natural interdependence among the firms regarding price and output policy.
Question 1A factor of production whose quantity can be changed d.docxmakdul
Question 1
A factor of production whose quantity can be changed during a particular period is a:
marginal factor of production.
fixed factor of production.
incremental factor of production.
variable factor of production.
Question 2
Assuming that all other factors of production are held constant, marginal product is the change in ________ output resulting from a 1-unit change in _______ .
total; a variable input
total; a fixed input
total; average product
per unit; a fixed input
Question 3
Average variable cost is the ratio of:
total cost to the marginal cost.
total cost to the amount of variable input.
variable cost to the quantity of output.
marginal cost to the quantity of output.
Question 4
The curve labeled V represents the firm's _______ curve.
total cost
average total cost
marginal cost
average variable cost
Question 5
When an increase in the firm's output reduces its long-run average cost, it experiences:
economies of scale.
diseconomies of scale.
constant returns to scale.
variable returns to scale.
Question 6
A firm that is able to more efficiently utilize by-products as it increases production in the long run is an example of:
economies of scale.
diseconomies of scale.
labor-intensive production.
capital-intensive production.
Question 7
If your plant is operating in the positively-sloped portion of a long-run average cost curve, this could be the result of:
decreased input prices.
improved utilization of by-products.
specialization of resources.
limited decision-making capacity.
Question 8
Perfect competition is a model of the market that assumes all of the following EXCEPT:
a large number of firms.
firms face downward-sloping demand curves.
firms produce identical goods.
many buyers.
Question 9
The Case in Point on the Burkha Industry suggested that this industry:
might be an example of perfect competition although it did not feature easy entry and exit.
might be an example of perfect competition because it did feature easy entry and exit.
might not be an example of perfect competition although it did feature easy entry and exit.
might not be an example of perfect competition because it did not feature easy entry and exit.
Question 10
If a perfectly competitive firm sells 30 units of output at a price of $10 per unit, its marginal revenue is:
$10.
more than $10.
less than $10.
$300.
Question 11
The difference between total revenue and total cost is:
economic profit.
nominal revenue.
average revenue.
marginal revenue.
Question 12
If a perfectly competitive firm is producing a quantity that generates MC < MR, then profit:
is maximized.
can be increased by increasing production.
can be increased by decreasing production.
can be increased by increasing the price.
Question 13
In the short run, a perfectly competitive firm does not produce output and earns a negative economic profit if:
P = ATC.
P < AVC.
AVC > P > ATC.
AVC < P < ATC.
Question 14
If all fir ...
PAGE 4Multiple-Choice Questions1. The difference betwee.docxalfred4lewis58146
PAGE
4
Multiple-Choice Questions
1. The difference between the short-run and the long-run production function is:
a. three months or one business quarter.
b. the time it takes for firms to change all production inputs.
c. the time it takes for firms to change only their variable inputs.
d. more information is required to answer this question.
2. Which of the following statements about the short-run production function is true?
a. MP always equals AP at the maximum point of MP.
b. MP always equals zero when TP is at its maximum.
c. TP starts to decline at the point of diminishing returns.
d. When MP diminishes, AP is at its minimum point.
e. None of the above is true.
3. Assume a firm employs 10 workers and pays each $15 per hour. Further assume that the MP of the 10th worker is 5 units of output and that the price of the output is $4. According to economic theory, in the short run
a. the firm should hire additional workers
b. the firm should reduce the number of workers employed
c. the firm should continue to employ 10 workers.
d. more information is required to answer this question.
4. A firm using two inputs, X and Y, is using them in the most efficient manner when
a. MPX = MPY
b. PX = PY and MPX = MPY
c. MPX/PY = MPY/PX
d. MPX/MPY = PX/PY
5. Average fixed cost is
a. AC minus AVC
b. TC divided by Q
c. AVC minus MC
d. TC minus TVC
6. Diseconomies of scale can be caused by
a. the law of diminishing returns.
b. bureaucratic inefficiencies.
c. increasing advertising and promotional costs.
d. all of the above.
7. Which of the following cost relationship is not true?
a. AFC = AC - MC
b. TVC = TC - TFC
c. the change in TVC divided by the change in Q = MC
d. the change in TC divided by the change in Q = MC
8. When a firm produces at the point where MR = MC, and the price of its product is higher that the cost per unit, the profit that it is earning is considered to be
a. maximum
b. normal
c. above normal
d. below normal
9. Which of the following is not characteristic of perfect competition?
a. A differentiated product
b. No barriers to entry
c. Large number of buyers
d. Complete knowledge of market price
10. Suppose a firm is currently maximizing its profits (i.e., following the MR = MC rule). Assuming that it wants to continue maximizing its profits, if its fixed costs increase, it should
a. maintain the same price
b. raise its price
c. lower its price
d. not enough information to answer this question
11. Which of the following is true about a monopoly?
a. Its demand curve is generally less elastic than in more competitive markets.
b. It will always earn economic profit.
c. It will charge the highest possible price.
d. It will always be subject to government regulations.
12. If an oligopolistic firm decides to raise its price,
a. other firms will automatically follow.
b. none of the other firms will follow.
c. other firms may follow if it is the price leader.
d. None of the above.
13.
Model Attribute Check Company Auto PropertyCeline George
In Odoo, the multi-company feature allows you to manage multiple companies within a single Odoo database instance. Each company can have its own configurations while still sharing common resources such as products, customers, and suppliers.
A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
Acetabularia Information For Class 9 .docxvaibhavrinwa19
Acetabularia acetabulum is a single-celled green alga that in its vegetative state is morphologically differentiated into a basal rhizoid and an axially elongated stalk, which bears whorls of branching hairs. The single diploid nucleus resides in the rhizoid.
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
Honest Reviews of Tim Han LMA Course Program.pptxtimhan337
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Read| The latest issue of The Challenger is here! We are thrilled to announce that our school paper has qualified for the NATIONAL SCHOOLS PRESS CONFERENCE (NSPC) 2024. Thank you for your unwavering support and trust. Dive into the stories that made us stand out!
Palestine last event orientationfvgnh .pptxRaedMohamed3
An EFL lesson about the current events in Palestine. It is intended to be for intermediate students who wish to increase their listening skills through a short lesson in power point.
1. ECO 550 Final Guide (All Possible
Questions)
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Chapter 9—Applications of Cost Theory
MULTIPLE CHOICE
1. Evidence from empirical studies of short-run cost-output
relationships lends support to the:
2. The short-run cost function is:
3. Theoretically, in a long-run cost function:
4. Break-even analysis usually assumes all of the following except:
5. What is another term meaning the degree of operating leverage?
6. In a study of banking by asset size over time, we can find which
asset sizes are tending to become more prominent. The size that is
becoming more predominant is presumed to be least cost. This is
called:
7. George Webb Restaurant collects on the average $5 per customer at
its breakfast & lunch diner. Its variable cost per customer averages $3,
and its annual fixed cost is $40,000. If George Webb wants to make a
profit of $20,000 per year at the diner, it will have to
serve__________ customers per year.
2. 8. In determining the shape of the cost-output relationship only ____
depreciation is relevant.
9. Which of the following is not a limitation of the survivor technique
for measuring the optimum size of firms within an industry?
10. The primary disadvantage of engineering methods for measuring
cost functions is that they deal with the managerial and
entrepreneurial aspects of the production process or plant.
11. A linear total cost function implies that:
12. A ____ total cost function implies that marginal costs ____ as
output is increased.
13. A ____ total cost function implies that marginal costs ____ as
output is increased.
14. A ____ total cost function yields a U-shaped average total cost
function.
15. In the linear breakeven model, the difference between selling
price per unit and variable cost per unit is referred to as:
16. Which of the following is not an assumption of the linear
breakeven model:
17. In the linear breakeven model, the breakeven sales volume (in
dollars) is equal to fixed costs divided by:
18. The degree of operating leverage is equal to the ____ change in
____ divided by the ____ change in ____.
19. The linear breakeven model excludes ____ from the analysis.
3. 20. In the linear breakeven model, the relevant range of output is that
range where the linearity assumptions of the model are assumed to
hold.
21. In the linear breakeven model, the breakeven sales volume (in
dollars) can be found by multiplying the breakeven sales volume (in
units) by:
22. In the linear breakeven model, a firm incurs operating losses
whenever output is less than the breakeven level.
PROBLEMS
1. For each of the following cost-output relationships, describe the
shape (U-shape, decreasing, increasing, constant) of the average total
cost and marginal cost functions (C = total cost, Q = output):
2. Offshore Petroleum's fixed costs are $2,500,000 and its debt
repayment requirements are $1,000,000. Selling price per barrel of oil
is $18 and variable costs per barrel are $10.
Chapter 10—Prices, Output, and Strategy: Pure and Monopolistic
Competition
MULTIPLE CHOICE
1. The main difference between perfect competition and monopolistic
competition is:
2. Long distance telephone service has become a competitive market.
The average cost per call is $0.05 a minute, and it’s declining. The
likely reason for the declining price for long distance service is:
3. What is the profit maximization point for a firm in a purely
competitive environment?
4. 4. All of the following are true for both competition and monopolistic
competition in the long run, except one of them. Which is it?
5. Which of the following statements is (are) true concerning a pure
competition situation?
6. In pure competition:
7. In the short-run for a purely competitive market, a manufacturer
will stop production when:
8. In the purely competitive case, marginal revenue (MR) is equal to:
9. In long-run equilibrium, all firms in a pure competition market
situation operating under a condition of certainty will have identical
costs even though they may use different production and operation
techniques.
10. If price exceeds average costs under pure competition, ____ firms
will enter the industry, supply will ____, and price will be driven
____.
11. A firm in pure competition would shut down when:
12. In the long-run, firms in a monopolistically competitive industry
will
13. Uncertainty includes all of the following except ____.
14. Experience goods are products or services
15. Buyers anticipate that the temporary warehouse seller of
unbranded computer equipment will
16. All of the following are mechanisms which reduce the adverse
selection problem except ____.
5. 17. Asset specificity is largest when
18. Under asymmetric information,
19. To escape adverse selection and elicit high quality experience
goods buyers can
20. The problems of asymmetric information exchange arise
ultimately because
21. The market for "lemons" is one in which
22. The fraudulent delivery of low quality experience goods at high
prices is more likely if
23. An "experience good" is one that:
24. A "search good" is:
25. The price for used cars is well below the price of new cars of the
same general quality. This is an example of:
PROBLEMS
1. Sunrise Juice Company sells its output in a perfectly competitive
market. The firm's total cost function is given in the following
schedule:
2. Superior Metals Company has seen its sales volume decline over
the last few years as the result of rising foreign imports. In order to
increase sales (and hopefully, profits), the firm is considering a price
reduction on luranium--a metal that it produces and sells. The firm
currently sells 60,000 pounds of luranium a year at an average price
of $10 per pound. Fixed costs of producing luranium are $250,000.
Current variable costs per pound are $5. The firm has determined that
the variable cost per pound could be reduced by $.50 if production
volume could be increased by 10 percent (fixed costs would remain
6. constant). The firm's marketing department has estimated the arc
elasticity of demand for luranium to be −1.5.
Chapter 11—Price and Output Determination: Monopoly and
Dominant Firms
MULTIPLE CHOICE
1. Unique Creations has a monopoly position in magnometers. If the
marginal cost for a magnometer is $50 and the price elasticity for
magnometers is -4, what is the optimal monopoly price?
2. Land’s End estimates a demand curve for turtleneck sweaters to be:
3. Declining cost industries
4. A monopolist seller of Irish ceramics faces the following demand
function for its product: P = 62 - 3Q. The fixed cost is $10 and the
variable cost per unit is $2. What is the maximizing QUANTITY for
this monopoly
5. Globo Public Supply has $1,000,000 in assets. Its demand curve is:
P = 206 - .20•Q and its total cost function is: TC = 20,000 + 6•Q
where TC excludes the cost of capital. If Globo Public Supply is
UNREGULATED, find Globo's optimal price.
6.A monopolist faces the following demand curve: P = 12 - .3Q with
marginal costs of $3. What is the monopolistic PRICE?
7. In natural monopoly, AC continuously declines due to economies
in distribution or in production, which tends to found in industries
which face increasing returns to scale. If price were set equal to
marginal cost, then:
8.The profit-maximizing monopolist, faced with a negative-sloping
demand curve, will always produce:
7. 9. In the case of pure monopoly:
10. A monopoly will always produce less than a purely competitive
industry, ceteris paribus.
11. The demand curve facing the firm in ____ is the same as the
industry demand curve.
12. When the cross elasticity of demand between one product and all
other products is low, one is generally referring to a(n) ____ situation.
14. Of the following, which is not an economic rationale for public
utility regulation?
15. The practice by telephone companies of charging lower long-
distance rates at night than during the day is an example of:
16. In the electric power industry, residential customers have
relatively ____ demand for electricity compared with large industrial
users. But contrary to price discrimination, large industrial users
generally are charged ____ rates.
17. ____ as practiced by public utilities is designed to encourage
greater usage and therefore spread the fixed costs of the utility's plant
over a larger number of units of output.
18. Regulatory agencies engage in all of the following activities
except _______.
PROBLEMS
1. The Zinger Company manufactures and sells a line of sewing
machines. Demand per period (Q) for a particular model is given by
the following relationship:
8. 2. Zar Island Gas Company is the sole producer of natural gas in the
remote island country of Zar. The company's operations are regulated
by the State Energy Commission. The demand function for gas in Zar
has been estimated as:
MULTIPLE CHOICE
1. "Conscious parallelism of action" among oligopolistic firms is an
example of ____.
2. The kinked demand curve model was developed to help explain:
3. An oligopoly is characterized by:
4. Which of the following is an example of an oligopolistic market
structure?
5. In the Cournot duopoly model, each of the two firms, in
determining its profit-maximizing price-output level, assumes that the
other firm's ____ will not change.
6. If a cartel seeks to maximize profits, the market share (or quota) for
each firm should be set at a level such that the ____ of all firms is
identical.
7. In the absence of any legally binding enforcement mechanism,
individual cartel producers may find it advantageous to cheat on the
agreements and engage in secret price concessions.
8. A(n) ____ is characterized by a relatively small number of firms
producing a product.
9. The distinctive characteristic of an oligopolistic market structure is
that there are recognizable interdependencies among the decisions of
the firms.
9. 10. Factors that affect the ability of oligopolistic firms to successfully
engage in cooperation include ____.
11. Effective oligopolistic collusion is more likely to occur when
customer orders are small, frequent, and received on a regular basis as
compared with large orders that are received infrequently at irregular
intervals.
12. Effective collusion generally is more difficult as the number of
oligopolistic firms involved increases.
13. The largest problem faced in cartel pricing agreements such as
OPEC is:
14. Some market conditions make cartels MORE likely to succeed in
collusion. Which of the following will make collusion more
successful?
15. Even ideal cartels tend to be unstable because
16. Suppose that in a perfectly competitive industry the equilibrium
industry quantity is 10,000 units. Suppose that the monopoly output is
5,000. For a2-firm Cournot Oligopoly (N =2) known as a duopoly,
what is a likely Cournot QUANTITY for the industry?
17. A cartel is a situation where firms in the industry
18. In a kinked demand market, whenever one firm decides to lower
its price,
20. Barometric price leadership exists when
21. Some industries that have rigid prices. In those industries, we
tend to
PROBLEMS
10. 1. Two companies (A and B) are duopolists that produce identical
products. Demand for the products is given by the following demand
function:
2. Two companies (A and B) are duopolists that produce identical
products. Demand for the products is given by the following demand
function:
3. The Winston Tobacco Company feels that it is faced with the
following segmented demand function for its cigarettes:
MULTIPLE CHOICE
1. In ____ 2-person, nonzero-sum games there is no communication
between the participants and no way to enforce agreements.
2. A strategy game is
3. Essential components of a game include all of the following except:
4. In a zero-sum game
5. When airlines post prices on an electronic bulletin board at 8:00
a.m. each morning, the decision-makers are engaged in
6. The starting point of many methods for predicting equilibrium
strategy in sequential games is
7. Consider the game known as the Prisoner's Dilemma. What's the
dilemma?
11. 8. When there is an Equilibrium (or a Nash Equilibrium), we expect
that:
9. The Prisoner’s Dilemma involves two spies who are held in
separate soundproof rooms. But even if the two spies could
communicate, what makes it difficult for them to achieve the
cooperative solution (both not confessing)?
10. When there is no Equilibrium (or no Nash Equilibrium), we
expect that:
11. In a game, a dominated strategy is one where:
12. If two firms operate in a market that is characterized as being a
Prisoner’s Dilemma, and the two strategies given them are to restrict
output or expand output, which of the following strategy pairs would
represent the cooperative solution in a duopoly for firm 1 and firm 2,
and firm 1 given first in each pair?
13. A key to analyzing subgame perfect equilibrium strategy in
sequential games is
14. Credibility in threats and commitments in sequential games is
based on
15. In making promises that are not guaranteed by third parties and in
imposing penalties that are not enforced by third parties, all of the
following are credibility-enhancing mechanisms except
16. The difference between cooperative and non-cooperative games is
17. An illustration of a non-credible commitment is the promise
18. A dominant strategy differs from a Nash equilibrium strategy in
that
12. 19. In adopting mixed Nash equilibrium strategy, a player is
attempting to
20. To trust a potential cooperator until the first defection and then
never cooperate thereafter is
21. Non-cooperative sequential games can incorporate all the
following features except
22. If one-time gains from defection are always less than the
discounted present value of an infinite time stream of cooperative
payoffs at some given discount rate, the decision-makers have
escaped
23. The chain store paradox of an incumbent who accommodates a
finite stream of potential entrants threatening to enter sequentially
numerous markets illustrates
24. Cooperation in repeated prisoner's dilemma situations seems to be
enhanced by all of the following except
25. Credible promises and hostage mechanisms can support a
continuous stream of cooperative exchanges except when
PROBLEMS
Exhibit 13-1
Consider the information below when answering the following
question(s):
1. In choosing whether to deliver to six or seven neighborhoods, Pizza
Spinners has to take into account not only its own costs, but also the
delivery area response of its competitor Harry's Pizzeria. If the
payoffs per week from delivering in six and seven neighborhoods are
as displayed in the exhibit above, what will Pizza Spinner's choose
and why?
13. 2. In choosing whether to deliver to six or seven neighborhoods,
Harry's Pizzeria has to take into account not only its own costs but the
delivery area response of its competitor Pizza Spinners. If the payoffs
per week from delivering in six and seven neighborhoods are as
displayed in Exhibit 13-1, what will Harry's Pizzeria choose and why?
3. If the city-pair route from Orlando to New Orleans is served by
only two air carriers, Northwest and Delta, and if the payoffs from
discounting or maintaining high prices are as below, what behavior
would you predict for Delta in a one-play game and why?
4. Retailers A and B anticipate many repetitions of the following
pricing game in which they must choose between discounting or
maintaining higher prices. Under what circumstances will store A
resist discounting and choose MAINTAIN?
5. Suppose a new low cost discount firm must decide in advance
between introducing LARGE or SMALL capacity in a licensed cable
TV market where the incumbent then will decide on a HIGH or
MATCHING pricing response. If the following table describes the
payoffs from various combinations of these strategies, what capacity
will the new entrant choose and why?
Appendix 13A—Entry Deterrence and Accommodation Games
MULTIPLE CHOICE
1. In deciding whether to invest in excess capacity in order to deter
entry, incumbents should consider all of the following except
2. An inverse intensity customer sorting rule is one in which
3. An efficient customer sorting rule is one in which
14. 4. All of the following are sunk cost investments that precommit an
incumbent to aggressively defend market share and the cash flow
prior to threatened entry except
Chapter 14—Pricing Techniques and Analysis
MULTIPLE CHOICE
1. The segmenting of customers into several small groups such as
household, institutional, commercial, and industrial users, and
establishing a different rate schedule for each group is known as:
2. Which of the statements about price discrimination is (are) false?
3. Which of the following pricing policies best identifies when a
product should be expanded, maintained, or discontinued?
4. Second-degree price discrimination:
5. In ____ price discrimination, the entire consumer surplus is
captured by the producer.
6. In ____ price discrimination, the monopolist charges each
consumer the highest price that purchaser is willing to pay for each
unit purchased (provided that this price exceeds the marginal cost of
production).
7. ____ is a new product pricing strategy which results in a high
initial product price. This price is reduced over time as demand at the
higher price is satisfied.
8. ____ is the price at which an intermediate good or service is
transferred from the selling to the buying division within the same
firm.
15. 9. For a monopolist that engages in price discrimination, when the
price elasticity in market 1 is less (in absolute value) than in market 2,
the optimal price in market 1 will exceed the optimal price in market
2.
10. To maximize profits, a monopolist that engages in price
discrimination must allocate output in such a way as to make identical
the ____ in all markets.
11. Barbers give a price discount to kids. According to price
discrimination, if barbers use price discrimination, this implies
demand for hair cuts by kids is more elastic.
12. Third-degree price discrimination exists whenever:
13. The following are possible examples of price discrimination,
EXCEPT:
14. Firms that have a cover charge for their customers and charge for
each item they purchase as well are exhibiting
15. A manufacturer produces two types of computer software, Word
processing (W) and Spreadsheet (S), which is offered to two different
retail outlets (#1 and #2). The following table shows the maximum
price each retail outlet is willing to pay for each individual software
product.
16. Vacation tours to Europe invariably package visits to disparate
regions: cities, mountains, and the seaside. Bundling, a type of
second degree price discrimination, is most profitable when:
17. The optimal mark-up is: m = -1/ (E+1). When the mark-up on
cookware equals 50%, then demand elasticity (E) for cookware is:
16. 18. [Advanced Material] Cross functional revenue management
examines capacity, pricing, and customer account management in
order to maximize revenue.
Capacity Planning
Pricing Customer Account Management
If the MegaPlex Movie Theater finds that too often they have to turn
customers away from their theaters at peak movie times for
blockbusters creating too much slippage, cross functional revenue
management suggests:
19. [Advanced Material] Restaurants try to buy just enough fish to
match the expected walk-ins and reservations. If they buy a lot more
fish, in the language of revenue management:
20. [Advanced Material] If an airline company decides to buy smaller
jets with fewer seats, then the problem of:
a. 21. [Advanced Material] If airlines found that the number of no-
shows starts to increase, then its policy for optimal overbooking
would tend to:
PROBLEM
1. Consolidated Salt Company sells table salt to both retail grocery
chains and commercial users (e.g., bakeries, snack food makers, etc.).
The demand function for each of these markets is:
MULTIPLE CHOICE
17. 1. Non-redeployable durable assets that are dependent upon unique
complementary and perfectly redeployable assets to achieve
substantial value-added will typically be organized as
2. Vertical integration may be motivated by all of the following
except:
3. Contracts are distinguished from tactical alliances by which of the
following characteristics:
4. When manufacturers and distributors establish credible
commitments to one another, they often employ
5. Which of the following is not among the functions of contract?
6. Buying electricity off the freewheeling grid at one quarter 'til the
hour for delivery on the hour illustrates:
7. When someone contracts to do a task but fails to put full effort into
the performance of an agreement, yet the lack of effort is not
independently verifiable, this lack of effort constitutes a
8. When retail bicycle dealers advertise and perform warranty repairs
but do not deliver the personal selling message that Schwinn has
designed as part of the marketing plan but cannot observe at less than
prohibitive cost, the manufacturer has encountered a problem of ____.
9. Which of the following are not approaches to resolving the
principal-agent problem?
10. To accomplish its purpose a linear profit-sharing contract must
11. Mac trucks and their dealers would likely have an organizational
form of
12. Reliant assets are always all of the following except:
18. 13. Governance mechanisms are designed
14. When borrowers who do not intend to repay are able to hide their
bad credit histories, a lender's well-intentioned borrowers should
15. Each of the following is an example of moral hazard in which
people modify their behavior in an opportunistic way, often
frustrating the intent of governmental or management policies.
Which is NOT an example of moral hazard?
16. Agency problems appear in many settings within a firm. All of the
following are examples, except which is NOT a good example of this
problem?
PROBLEMS
1. Cooperative agreements between manufacturers and retailers
concerning retail promotion and manufacturer advertising are often
the key to the success of new products. Analyze the following
sequential product promotion game, and then predict 1) whether the
product will be updated by the manufacturer (Man), 2) whether the
retail distributor (RET) will promote the product, and 3) whether the
manufacturer will advertise the product. No explanation necessary.
2. In the following sequential marketing game, is a threat by the
manufacturer (Man) not to advertise a newly updated product unless
the retailer (RET) promotes it a credible threat?
Appendix 15A—Auction Design and Information Economics
MULTIPLE CHOICE
19. 1. Common value auctions with open bidding necessarily entail
2. An incentive-compatible mechanism for revealing true willingness
to pay in a private value auction is
3. In comparing rules for serving a queue, last-come first-served has
all of the following effects except
4. The principal advantage of an open bidding system for allocating
telecommunications spectrum licenses was
****************************************
ECO 550 Midterm Part 1 and 2 (All Possible
Questions)
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Chapter 1—Introduction and Goals of the Firm
MULTIPLE CHOICE
1. The form of economics most relevant to managerial decision-
making within the firm is:
2. If one defines incremental cost as the change in total cost resulting
from a decision, and incremental revenue as the change in total
revenue resulting from a decision, any business decision is profitable
if:
20. 3. In the shareholder wealth maximization model, the value of a firm's
stock is equal to the present value of all expected future ____
discounted at the stockholders' required rate of return.
4. Which of the following statements concerning the shareholder
wealth maximization model is (are) true?
5. According to the profit-maximization goal, the firm should attempt
to maximize short-run profits since there is too much uncertainty
associated with long-run profits.
6. According to the innovation theory of profit, above-normal profits
are necessary to compensate the owners of the firm for the risk they
assume when making their investments.
7. According to the managerial efficiency theory of profit, above-
normal profits can arise because of high-quality managerial skills.
8. Which of the following (if any) is not a factor affecting the profit
performance of firms:
9. Agency problems and costs are incurred whenever the owners of a
firm delegate decision-making authority to management.
10. Economic profit is defined as the difference between revenue and
____.
11. Income tax payments are an example of ____.
12. Various executive compensation plans have been employed to
motivate managers to make decisions that maximize shareholder
wealth. These include:
21. 13. The common factors that give rise to all principal-agent problems
include the
14. The Saturn Corporation (once a division of GM) was permanently
closed in 2009. What went wrong with Saturn?
15. A Real Option Value is:
16. Which of the following will increase (V0), the shareholder wealth
maximization model of the firm:
V0∙(shares outstanding) = S¥t=1(pt ) / (1+ke)t + Real Option Value.
17. The primary objective of a for-profit firm is to ___________.
18. Possible goals of Not-For-Profit (NFP) enterprises include all of
the following EXCEPT:
19. The flat-screen plasma TVs are selling extremely well. The
originators of this technology are earning higher profits. What theory
of profit best reflects the performance of the plasma screen makers?
20. To reduce Agency Problems, executive compensation should be
designed to:
21. Recently, the American Medical Association changed its
recommendations on the frequency of pap-smear exams for women.
The new frequency recommendation was designed to address the
family histories of the patients. The optimal frequency should be
where the marginal benefit of an additional pap-test:
Chapter 2
22. 1. A change in the level of an economic activity is desirable and
should be undertaken as long as the marginal benefits exceed the
____.
2. The level of an economic activity should be increased to the point
where the ____ is zero.
3. The net present value of an investment represents
4. Generally, investors expect that projects with high expected net
present values also will be projects with
5. An closest example of a risk-free security is
6. The standard deviation is appropriate to compare the risk between
two investments only if
7. The approximate probability of a value occurring that is greater
than one standard deviation from the mean is approximately
(assuming a normal distribution)
8. Based on risk-return tradeoffs observable in the financial
marketplace, which of the following securities would you expect to
offer higher expected returns than corporate bonds?
9. The primary difference(s) between the standard deviation and the
coefficient of variation as measures of risk are:
10. The ____ is the ratio of ____ to the ____.
11. Sources of positive net present value projects include
23. 12. Receiving $100 at the end of the next three years is worth more to
me than receiving $260 right now, when my required interest rate is
10%.
13. The number of standard deviations z that a particular value of r is
from the mean ȓ can be computed as z = (r - ȓ)/ s. Suppose that you
work as a commission-only insurance agent earning $1,000 per week
on average. Suppose that your standard deviation of weekly earnings
is $500. What is the probability that you zero in a week? Use the
following brief z-table to help with this problem.
t
T
14. Consider an investment with the following payoffs and
probabilities:
15. Consider an investment with the following payoffs and
probabilities:
16. An investment advisor plans a portfolio your 85 year old risk-
averse grandmother. Her portfolio currently consists of 60% bonds
and 40% blue chip stocks. This portfolio is estimated to have an
expected return of 6% and with a standard deviation 12%. What is
the probability that she makes less than 0% in a year? [A portion of
Appendix B1 is given below, where z = (x - m)/s , with m as the mean
and s as the standard deviation.]
17. Two investments have the following expected returns (net present
values) and standard deviations:
PROBLEMS
24. 1. Suppose that the firm's cost function is given in the following
schedule (where Q is the level of output):
2. Complete the following table.
3. A firm has decided to invest in a piece of land. Management has
estimated that the land can be sold in 5 years for the following
possible prices:
Chapter 3—Demand Analysis
MULTIPLE CHOICE
1. Suppose we estimate that the demand elasticity for fine leather
jackets is .7 at their current prices. Then we know that:
2. If demand were inelastic, then we should immediately:
3. In this problem, demonstrate your knowledge of percentage rates of
change of an entire demand function (HINT: %DQ = EP•%DP +
EY•%DY). You have found that the price elasticity of motor control
devices at Allen-Bradley Corporation is -2, and that the income
elasticity is a +1.5. You have been asked to predict sales of these
devices for one year into the future. Economists from the Conference
Board predict that income will be rising 3% over the next year, and
AB’s management is planning to raise prices 2%. You expect that the
number of AB motor control devices sold in one year will:
4 A linear demand for lake front cabins on a nearby lake is estimated
to be: QD = 900,000 - 2P. What is the pointprice elasticity for lake
front cabins at a price of P = $300,000?
5. Property taxes are the product of the tax rate (T) and the assessed
value (V). The total property tax collected in your city (P) is: P =
25. T•V. If the value of properties rise 4% and if Mayor and City
Council reduces the property the tax rate by 2%, what happens to the
total amount of property tax collected? [HINT: the percentage rate of
change of a product is approximately the sum of the percentage rates
of change.}
6. Demand is given by QD = 620 10•P and supply is given by QS =
100 + 3•P. What is the price and quantity when the market is in
equilibrium?
7. Which of the following would tend to make demand INELASTIC?
8. Which of the following best represents management's objective(s)
in utilizing demand analysis?
9. Identify the reasons why the quantity demanded of a product
increases as the price of that product decreases.
10. An increase in the quantity demanded could be caused by:
11. Iron ore is an example of a:
12. If the cross price elasticity measured between items A and B is
positive, the two products are referred to as:
13. When demand is ____ a percentage change in ____ is exactly
offset by the same percentage change in ____ demanded, the net
result being a constant total consumer expenditure.
14. Marginal revenue (MR) is ____ when total revenue is maximized.
15. The factor(s) which cause(s) a movement along the demand curve
include(s):
26. 16. An increase in each of the following factors would normally
provide a subsequent increase in quantity demanded, except:
17. Producers' goods are:
18. The demand for durable goods tends to be more price elastic than
the demand for non-durables.
19. A price elasticity (ED) of -1.50 indicates that for a ____ increase
in price, quantity demanded will ____ by ____.
20. Those goods having a calculated income elasticity that is negative
are called:
21. An income elasticity (Ey) of 2.0 indicates that for a ____ increase
in income, ____ will increase by ____.
22. When demand elasticity is ____ in absolute value (or ____), an
increase in price will result in a(n) ____ in total revenues.
23. Empirical estimates of the price elasticity of demand [in Table
3.4] suggest that the demand for household consumption of alcoholic
beverages is:
PROBLEM
1. The manager of the Sell-Rite drug store accidentally mismarked a
shipment of 20-pound bags of charcoal at $4.38 instead of the regular
price of $5.18. At the end of a week, the store's inventory of 200 bags
of charcoal was completely sold out. The store normally sells an
average of 150 bags per week.
27. 2. The Future Flight Corporation manufactures a variety of Frisbees
selling for $2.98 each. Sales have averaged 10,000 units per month
during the last year. Recently Future Flight's closest competitor,
Soaring Free Company, cut its prices on similar Frisbees from $3.49
to $2.59. Future Flight noticed that its sales declined to 8,000 units
per month after the price cut.
3. The British Automobile Company is introducing a brand new
model called the "London Special." Using the latest forecasting
techniques, BAC economists have developed the following demand
function for the "London Special":
4. Hanna Corporation markets a compact microwave oven. In 2010
they sold 23,000 units at $375 each. Per capita disposable income in
2010 was $6,750. Hanna economists have determined that the arc
price elasticity for this microwave oven is -1.2.
Chapter 4—Estimating Demand
MULTIPLE CHOICE
1. Using a sample of 100 consumers, a double-log regression model
was used to estimate demand for gasoline. Standard errors of the
coefficients appear in the parentheses below the coefficients.
2. In a cross section regression of 48 states, the following linear
demand for per-capita cans of soda was found:
3. A study of expenditures on food in cities resulting in the following
equation:
28. 4. All of the following are reasons why an association relationship
may not imply a causal relationship except:
5. In regression analysis, the existence of a significant pattern in
successive values of the error term constitutes:
6. In regression analysis, the existence of a high degree of
intercorrelation among some or all of the explanatory variables in the
regression equation constitutes:
7. When using a multiplicative power function (Y = a X1b1 X2b2
X3b3) to represent an economic relationship, estimates of the
parameters (a, and the b's) using linear regression analysis can be
obtained by first applying a ____ transformation to convert the
function to a linear relationship.
8. The correlation coefficient ranges in value between 0.0 and 1.0.
9. The coefficient of determination ranges in value between 0.0 and
1.0.
10. The coefficient of determination measures the proportion of the
variation in the independent variable that is "explained" by the
regression line.
11. The presence of association between two variables does not
necessarily imply causation for the following reason(s):
12. The estimated slope coefficient (b) of the regression equation (Ln
Y = a + b Ln X) measures the ____ change in Y for a one ____
change in X.
13. The standard deviation of the error terms in an estimated
regression equation is known as:
29. 14. In testing whether each individual independent variables (Xs) in a
multiple regression equation is statistically significant in explaining
the dependent variable (Y), one uses the:
15. One commonly used test in checking for the presence of
autocorrelation when working with time series data is the ____.
16. The method which can give some information in estimating
demand of a product that hasn’t yet come to market is:
17. Demand functions in the multiplicative form are most common for
all of the following reasons except:
18. The Identification Problem in the development of a demand
function is a result of:
19. Consider the following linear demand function where QD =
quantity demanded, P = selling price, and Y = disposable income:
20. Consider the following multiplicative demand function where QD
= quantity demanded, P = selling price, and Y = disposable income:
21. One shortcoming of the use of ____ in demand analysis is that the
participants are generally aware that their actions are being observed
and hence they may seek to act in a manner somewhat different than
normal.
22. The constant or intercept term in a statistical demand study
represents the quantity demanded when all independent variables are
equal to:
23. Novo Nordisk A/S, a Danish firm, sells insulin and other drugs
worldwide.Activella, an estrogen and progestin hormone replacement
therapy sold by Novo-Nordisk, is examined using 33 quarters of data
Y = -204 + . 34X1 - .17X2
30. (17.0) (-1.71)
Where Y is quarterly sales of Activella, X1 is the Novo’s advertising
of the hormone therapy, and X2 is advertising of a similar product by
Eli Lilly and Company, Novo-Nordisk’s chief competitor. The
parentheses contain t-values. Addition information is: Durbin-Watson
= 1.9 and R2 = .89.
Using the data for Novo-Nordisk, which is correct?
24. In which of the following econometric problems do we find
Durbin-Watson statistic being far away from 2.0?
25. When there is multicollinearity in an estimated regression
equation,
26. When two or more "independent" variables are highly correlated,
then we have:
27. Which is NOT true about the coefficient of determination?
PROBLEMS
1. Phoenix Lumber Company uses the number of construction permits
issued to help estimate demand (sales). The firm collected the
following data on annual sales and number of construction permits
issued in its market area:
2. Lenny's, a national restaurant chain, conducted a study of the
factors affecting demand (sales). The following variables were
defined and measured for a random sample of 30 of its restaurants:
3. The following demand function has been estimated for Fantasy
pinball machines:
31. 4. Given the following demand function:
Q = 2.0 P-1.33 Y2.0 A.50
Chapter 5—Business and Economic Forecasting
MULTIPLE CHOICE
1. Time-series forecasting models:
2. The forecasting technique which attempts to forecast short-run
changes and makes use of economic indicators known as leading,
coincident or lagging indicators is known as:
3. The use of quarterly data to develop the forecasting model Yt = a
+bYt-1 is an example of which forecasting technique?
4. Variations in a time-series forecast can be caused by:
5. The variation in an economic time-series which is caused by major
expansions or contractions usually
of greater than a year in duration is known as:
6. The type of economic indicator that can best be used for business
forecasting is the:
7. Consumer expenditure plans is an example of a forecasting method.
Which of the general categories best described this example?
8. In the first-order exponential smoothing model, the new forecast is
equal to a weighted average of the old forecast and the actual value in
the most recent period.
9. Simplified trend models are generally appropriate for predicting the
turning points in an economic time series.
32. 10. Smoothing techniques are a form of ____ techniques which
assume that there is an underlying pattern to be found in the historical
values of a variable that is being forecast.
11. Seasonal variations can be incorporated into a time-series model
in a number of different ways, including:
12. For studying demand relationships for a proposed new product
that no one has ever used before, what would be the best method to
use?
13. Which of the following barometric indicators would be the most
helpful for forecasting future sales for an industry?
14. An example of a time series data set is one for which the:
15. Examine the plot of data.
16. Emma uses a linear model to forecast quarterly same-store sales at
the localGardenCenter. The results of her multiple regression is:
17. Select the correct statement.
18. If two alternative economic models are offered, other things equal,
we would
19. Mr. Geppettouses exponential smoothing to predict revenue in his
wood carving business. He uses a weight of w = .4 for the naïve
forecast and (1-w) = .6 for the past forecast. What revenue did he
predict for March using the data below? Select closet answer.
20. Suppose a plot of sales data over time appears to follow an S-
shape as illustrated below.
33. Which of the following is likely that the best forecasting functional
form to use for sales data above?
PROBLEM
1. The Accuweather Corporation manufactures barometers and
thermometers for weather forecasters. In an attempt to forecast its
future needs for mercury, Accuweather's chief economist estimated
average monthly mercury needs as:
2. Milner Brewing Company experienced the following monthly sales
(in thousands of barrels) during 2010:
Chapter 6—Managing Exports
MULTIPLE CHOICE
1. Using demand and supply curves for the Japanese yen based on the
$/¥ price for yen, an increase in US INFLATION RATES would
2. If the British pound (₤) appreciates by 10% against the dollar:
3. Purchasing power parity or PPP says the ratios composed of:
4. If Ben Bernanke, Chair of the Federal Reserve Board, begins to
tighten monetary policy by raising US interest rates next year, what is
the likely impact on the value of the dollar?
5. If the domestic prices for traded goods rises 5% in Japan and rises
7% the US over the same period, what would happened to the Yen/US
dollar exchange rate?
6. US and Canada can both grow wheat and can do mining. Use the
following table to look for which country has a comparative
advantage in mining.
34. 7. The optimal currency area involves a trade-off of reducing
transaction costs but the inability to use changes in exchange rates to
help ailing regions. If the US, Canada, and Mexico had one single
currency (the Peso-Dollar) we would tend to see all of the following
EXCEPT:
8. If the value of the U.S. dollar rises from 1.0 per dollar to 1.3 per
dollar,
9. An appreciation of the U.S. dollar has what impact on Harley-
Davidson (HD), a U.S. manufacturer of motorcycles?
10. In the last twenty-five years, the Yen and German mark and now
the Euro have
11. In an open economy with few capital restrictions and substantial
import-export trade, a rise in interest rates and a decline in the
producer price index of inflation will
12. When a manufacturer's home currency appreciates substantially,
13. An increase in the exchange rate of the U.S. dollar relative to a
trading partner can result from
14. The purchasing power parity hypothesis implies that an increase
in inflation in one country relative to another will over a long period
of time
15. Trading partners should specialize in producing goods in
accordance with comparative advantage, then trade and diversify in
consumption because
16. European Union labor costs exceed U.S. and British labor costs
primarily because
35. 17. Companies that reduce their margins on export products in the
face of appreciation of their home currency may be motivated by a
desire to
18. In a recession, the trade balance often improves because
PROBLEM
1. Suppose nominal interest rates in the U.S. rise from 4.6% to 5%
and decline in Britain from 6% to 5.5%, while U.S. consumer
inflation remains unchanged at 1.9% and British inflation declines
from 4% to 3%. In addition suppose, real growth in the U.S. is
forecasted for next year at 4% and in Britain real growth is forecasted
at 5%. Finally, suppose producer price inflation in the U.S. is
declining from 2% to 1% while in Britain producer price inflation is
rising from 2% to 3.2%. Explain what effect each of these factors
would have on the long-term trend exchange rate ( per $) and why?
Chapter 7—Production Economics
MULTIPLE CHOICE
1. What’s true about both the short-run and long-run in terms of
production and cost analysis?
2. The marginal product is defined as:
3. Fill in the missing data to solve this problem.
4. The following is a Cobb-Douglas production function: Q =
1.75K0.5∙L0.5. What is correct here?
5. Suppose you have a Cobb-Douglas function with a capital elasticity
of output (α) of 0.28 and a labor elasticity of output (β) of 0.84. What
statement is correct?
36. 6. The Cobb-Douglas production function is: Q = 1.4*L0.6*K0.5.
What would be the percentage change in output (%∆Q) if labor grows
by 3.0% and capital is cut by 5.0%?
7. If the marginal product of labor is 100 and the price of labor is 10,
while the marginal product of capital is 200 and the price of capital is
$30, then what should the firm?
8. The marginal rate of technical substitution may be defined as all of
the following except:
9. The law of diminishing marginal returns:
10. The combinations of inputs costing a constant C dollars is called:
11. In a relationship among total, average and marginal products,
where TP is maximized:
12. Holding the total output constant, the rate at which one input X
may be substituted for another input Y in a production process is:
13. Which of the following is never negative?
14. Concerning the maximization of output subject to a cost
constraint, which of the following statements (if any) are true?
15. In a production process, an excessive amount of the variable input
relative to the fixed input is being used to produce the desired output.
This statement is true for:
16. Marginal revenue product is:
17. The isoquants for inputs that are perfect substitutes for one
another consist of a series of:
18. In production and cost analysis, the short run is the period of time
in which one (or more) of the resources employed in the production
process is fixed or incapable of being varied.
37. 19. Marginal revenue product is defined as the amount that an
additional unit of the variable input adds to ____.
20. Marginal factor cost is defined as the amount that an additional
unit of the variable input adds to ____.
21. The isoquants for inputs that are perfect complements for one
another consist of a series of:
22. Given a Cobb-Douglas production function estimate of Q =
1.19L.72K.18 for a given industry,&
****************************************
ECO 550 Midterm Part 1
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Question 1
Possible goals of Not-For-Profit (NFP) enterprises include all of the
following EXCEPT:
Question 2
In the shareholder wealth maximization model, the value of a firm's
stock is equal to the present
value of all expected future ____ discounted at the stockholders'
required rate of return.
Question 3
38. Various executive compensation plans have been employed to
motivate managers to make
decisions that maximize shareholder wealth. These include:
Question 4
The primary objective of a for-profit firm is to ___________.
Question 5
To reduce Agency Problems, executive compensation should be
designed to:
Question 6
Which of the following will increase (V0), the shareholder wealth
maximization model of the firm:
V0∙(shares outstanding) = Σ∞t=1 (π t ) / (1+ke)t + Real Option
Value.
Question 7
A change in the level of an economic activity is desirable and should
be undertaken as long as the
marginal benefits exceed the ____.
Question 8
The standard deviation is appropriate to compare the risk between two
investments only if
Question 9
Based on risk-return tradeoffs observable in the financial marketplace,
which of the following
39. securities would you expect to offer higher expected returns than
corporate bonds?
Question 10
The ____ is the ratio of ____ to the ____.
Question 11
The approximate probability of a value occurring that is greater than
one standard deviation from
the mean is approximately (assuming a normal distribution)
Question 12
The primary difference(s) between the standard deviation and the
coefficient of variation as
measures of risk are:
Question 13
Suppose we estimate that the demand elasticity for fine leather jackets
is .7 at their current
prices. Then we know that:
Question 14
Producers' goods are:
Question 15
When demand is ____ a percentage change in ____ is exactly offset
by the same percentage change
in ____ demanded, the net result being a constant total consumer
expenditure.
40. Question 16
Songwriters and composers press music companies to lower the price
for music downloads because
Question 17
A price elasticity (ED) of −1.50 indicates that for a ____ increase in
price, quantity demanded will
____ by ____.
Question 18
The factor(s) which cause(s) a movement along the demand curve
include(s):
Which of the following would tend to make demand INELASTIC?
Question 20
Even though insignificant explanatory variables can raise the adjusted
R2 of a demand function,
one should not interpret their effects on the regression when
Question 21
In testing whether each individual independent variables (Xs) in a
multiple regression equation is
statistically significant in explaining the dependent variable (Y), one
uses the:
Question 22
The estimated slope coefficient (b) of the regression equation (Ln Y =
a + b Ln X) measures the ____
41. change in Y for a one ____ change in X.
Question 23
In which of the following econometric problems do we find Durbin-
Watson statistic being far away
from 2.0?
Question 24
When using a multiplicative power function (Y = a X1b1 X2b2 X3b3)
to represent an economic
relationship, estimates of the parameters (a, and the b's) using linear
regression analysis can be
obtained by first applying a ____ transformation to convert the
function to a linear relationship.
Question 25
One commonly used test in checking for the presence of
autocorrelation when working with time
series data is the ____.
***********************************
ECO 550 Midterm Part 2
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Question 1
The forecasting technique which attempts to forecast short-run
changes and makes use of economic
42. indicators known as leading, coincident or lagging indicators is
known as:
Question 2
Consumer expenditure plans is an example of a forecasting method.
Which of the general categories
best described this example?
Question 3
Which of the following barometric indicators would be the most
helpful for forecasting future sales
for an industry?
Question 4
The use of quarterly data to develop the forecasting model Yt = a
+bYt−1 is an example of which
forecasting technique?
Question 5
If two alternative economic models are offered, other things equal, we
would
Question 6
Smoothing techniques are a form of ____ techniques which assume
that there is an underlying
pattern to be found in the historical values of a variable that is being
forecast.
Question 7
43. In Chinese coastal provinces, brick housing for a fast expanding
middle class is very comparable in
size to housing in the U.S. for a family with median income of
$51,000 because
Question 8
If Ben Bernanke, Chair of the Federal Reserve Board, begins to
tighten monetary policy by raising US
interest rates next year, what is the likely impact on the value of the
dollar?
Question 9
Companies that reduce their margins on export products in the face of
appreciation of their home
currency may be motivated by a desire to
Question 10
Trading partners should specialize in producing goods in accordance
with comparative advantage,
then trade and diversify in consumption because
Question 11
If the British pound (₤) appreciates by 10% against the dollar:
Question 12
An appreciation of the U.S. dollar has what impact on Harley-
Davidson (HD), a U.S. manufacturer of
motorcycles?
Question 13
44. The optimal currency area involves a trade-off of reducing transaction
costs but the inability to use
changes in exchange rates to help ailing regions. If the US, Canada,
and Mexico had one single
currency (the Peso-Dollar) we would tend to see all of the following
EXCEPT:
Question 14
The isoquants for inputs that are perfect substitutes for one another
consist of a series of:
Question 15
Which of the following is never negative?
Question 16
The marginal rate of technical substitution may be defined as all of
the following except:
Question 17
If the marginal product of labor is 100 and the price of labor is 10,
while the marginal product of
capital is 200 and the price of capital is $30, then what should the
firm?
Question 18
Marginal factor cost is defined as the amount that an additional unit of
the variable input adds to
____.
Question 19
The combinations of inputs costing a constant C dollars is called:
45. Question 20
According to the theory of cost, specialization in the use of variable
resources in the short-run
results initially in:
Question 21
If TC = 321 + 55Q - 5Q2, then average total cost at Q = 10 is:
Question 22
Economies of Scope refers to situations where per unit costs are:
Question 23
Economies of scale exist whenever long-run average costs:
Question 24
What method of inventory valuation should be used for economic
decision-making problems?
Question 25
The existence of diseconomies of scale (size) for the firm is
hypothesized to result from:
****************************************
ECO 550 Week 1 DQ 1 Fundamental
Economic Concepts
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46. www.snaptutorial.com
"Fundamental Economic Concepts" Please respond to the following:
Answer the following DQs based on the Katrina’s Candies scenario:
From the scenario for Katrina’s Candies, examine the key factors
affecting the demand for and the supply of a good in general and
Katrina’s Candies specifically. 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 how the change is effected by these factors.
Indicate the factors that are responsible for a shift in supply; and
explain how the change is affected by these factors.
****************************************
ECO 550 Week 1 DQ 2 Supply and Demand
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From the e-Activity, examine the key factors that influence the supply
and demand of the selected good in general and Katrina’s Candies
specifically.
Propose two (2) methods in which organizations that provide the good
may utilize this information. Provide a rationale for your response.
****************************************
ECO 550 Week 1-11 All DQs
47. For more classes visit
www.snaptutorial.com
ECO 550 Week 1 DQ 1 Fundamental Economic Concepts
ECO 550 Week 1 DQ 2 Supply and Demand
ECO 550 Week 2 DQ 1 Estimating Demand
ECO 550 Week 2 DQ 2 Estimating Elasticity of Demand
ECO 550 Week 3 DQ 1 Managing in the Global Economy
ECO 550 Week 3 DQ 2 Outsourcing Offshore
ECO 550 Week 4 DQ 1 Production Economics
ECO 550 Week 4 DQ 2 Production Decisions
ECO 550 Week 5 DQ 1 Applications of Cost Theory
ECO 550 Week 5 DQ 2 Cost Management
ECO 550 Week 6 DQ 1 Market Structures
ECO 550 Week 6 DQ 2 Maximizing Revenue
ECO 550 Week 7 DQ 1 Predicting Price-Setting Strategies
ECO 550 Week 7 DQ 2 Price-Setting Strategies
ECO 550 Week 8 DQ 1 Entering a Merger
ECO 550 Week 8 DQ 2 Organizational Form
ECO 550 Week 9 DQ 1 Impact of Government Regulation
ECO 550 Week 9 DQ 2 Government Regulation
ECO 550 Week 10 DQ 1 Long-Term Investment
ECO 550 Week 10 DQ 2 Cost-Benefit Analysis
ECO 550 Week 11 DQ 1 Transfer It
ECO 550 Week 11 DQ 2 Best Practices
****************************************
ECO 550 Week 2 DQ 1 Estimating Demand
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48. "Estimating Demand" Please respond to the following:
From the scenario for Katrina’s Candies, examine the procedure Herb
will use to estimate the demand model developed in the scenario for
Week 1.
Determine the meaning, relevance, and importance for a manager
interpreting the regression results.
****************************************
ECO 550 Week 2 DQ 2 Estimating Elasticity
of Demand
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From the e-Activity, analyze the elasticity of demand for products
within the selected industry relevant to Katrina’s Candies.
Determine the factors involved in making decisions about pricing
these products that you believe to be the most influential.
Provide a rationale for your response.
****************************************
ECO 550 Week 3 Assignment 1 Demand
Estimation (2 Sets)
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49. This Tutorial contains 2 Sets
Option 1: Demand equation:
QD = - 5200 - 42P + 20PX + 5.2I + .20A + .25M
(2.002) (17.5) (6.2) (2.5) (0.09) (0.21)
R2 = 0.55 n = 26 F = 4.88
Independent variables:
Q = Quantity demanded of 3-pack units
P (in cents) = Price of the product = 500 cents per 3-pack unit
PX (in cents) = Price of leading competitor’s product = 600 cents per
3-pack unit
I (in dollars) = Per capita income of the standard metropolitan
statistical area
(SMSA) in which the supermarkets are located = $5,500
A (in dollars) = Monthly advertising expenditures = $10,000
M = Number of microwave ovens sold in the SMSA in which the
supermarkets are located = 5,000
1. Compute the elasticities for each independent variable
2. Determine the implications for each of the computed elasticities for
the business in terms of short-term and long-term pricing strategies.
Provide a rationale in which you cite your results.
3. Recommend whether you believe that this firm should or should
not cut its price to increase its market share. Provide support for your
recommendation.
4. Assume that all the factors affecting demand in this model remain
the same, but that the price has changed. Further assume that the price
changes are 100, 200, 300, 400, 500, 600 cents.
a. Plot the demand curve for the firm.
b. Plot the corresponding supply curve on the same graph using the
following MC / supply function Q = -7909.89 + 79.1P with the same
prices.
c. Determine the equilibrium price and quantity.
d. Outline the significant factors that could cause changes in supply
and demand for the low-calorie, frozen microwavable food.
Determine the primary manner in which both the short-term and the
50. long-term changes in market conditions could impact the demand for,
and the supply, of the product.
5. Indicate the crucial factors that could cause rightward shifts and
leftward shifts of the demand and supply curves for the low-
****************************************
ECO 550 Week 3 DQ 1 Managing in the
Global Economy
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"Managing in the Global Economy" Please respond to the following:
· *Answer the following DQs based on the Katrina’s Candies
scenario:
o From the scenario for Katrina’s Candies, assuming the absence of
quantitative data, determine the qualitative forecasting techniques that
could be used within this scenario.
Now, assume you have acquired some time series data that
would enable you to make short, medium, and long term
forecasts. Ascertain the quantitative technique that will provide
you with the most accurate forecast. Provide a rationale for your
responses
****************************************
ECO 550 Week 3 DQ 2 Outsourcing Offshore
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51. www.snaptutorial.com
"Outsourcing Offshore" Please respond to the following:
· Answer the following DQs on the decision to outsource
offshore:
o Aside from maximizing profits, list the key factors that managers
should consider when deciding whether or not to outsource offshore.
Determine the key factors that you believe to be the most influential.
Provide a rationale for your response.
Examine the manner in which the firm’s decision to outsource
offshore is impacted by foreign exchange. Determine whether or
not it matters where the company outsources offshore. Provide a
rationale for your response.
****************************************
ECO 550 Week 4 DQ 1 Production Economics
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ECO 550 Week 4 DQ 1
"Production Economics" Please respond to the following:
· * From the scenario for Katrina’s Candies, determine the
relevant costs for the expansion decision, and distinguish between the
short run and the long run costs.
52. Recommend the key decision-making criteria that Katrina’s Candies
should use for expansion decisions in the short run and in the long
run. Provide rationale for your response.
·
· * From the scenario for Katrina’s Candies, determine the
relevant costs for the expansion decision, and distinguish between the
short run and the long run costs. Recommend the key decision-
making criteria that Katrina’s Candies should use for expansion
decisions in the short run and in the long run. Provide rationale for
your response.
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ECO 550 Week 4 DQ 2 Production Decisions
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ECO 550 Week 4 DQ 2
"Production Decisions" Please respond to the following:
· From the e-Activity, recommend whether the company in
question should or should not continue to produce the good or service.
Provide a rationale for your response.
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ECO 550 Week 5 DQ 1 Applications of Cost
Theory
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ECO 550 Week 5 DQ 1
"Applications of Cost Theory" Please respond to the following:
· * Answer the following DQs based on the Katrina’s Candies
scenario:
o From the scenario for Katrina’s Candies, determine the appropriate
type of market structure for the situation in question.
Cite at least four (4) defining characteristics that have helped you
reach this decision regarding the appropriateness of the chosen
structure.
o Recommend two (2) kinds of pricing and output strategies that
Katrina’s Candies should use to reach the goal of profit maximization.
Suggest key modifications that Katrina’s Candies should make in
order to maintain a competitive advantage when new entrants enter
the market.
Provide a rationale for your suggestions.
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ECO 550 Week 5 DQ 2 Cost Management
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54. ECO 550 Week 5 DQ 2
"Cost Management" Please respond to the following:
· Imagine that 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. 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 future.
Predict the impact on profitability in both situations. Justify your
response.
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ECO 550 Week 6 Assignment 2 Operations
Decisions (2 Papers)
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This Tutorial contains 2 Different Papers
Using the regression results and the other computations from
Assignment 1, determine the market structure in which the low-
calorie food company operates.
Use the Internet to research two (2) of the leading competitors in the
low-calorie microwavable food industry, and take note of their pricing
strategies, profitability, and their relationships within the industry
(worldwide).
Write a six to eight (6-8) page paper in which you:
55. 1.Outline a plan that will assess the effectiveness of the market
structure for the company’s operations.
2.Suppose the business operations have now changed from the market
structure specified in the scenario. Determine two (2) likely factors
that might have caused the change. Predict the primary manner in
which this change would likely impact business operations in the new
market environment.
3.Analyze the major short-run and long-run production and cost
functions for the low-calorie microwaveable food company. Suggest
substantive ways in which the low-calorie food company may use this
information in order to make decisions in both the short-run and the
long-run.
4.Determine the possible circumstances under which the company
should discontinue operations. Suggest key actions that management
should take in order to confront these circumstances. Provide a
rationale for your response.
5.Suggest one (1) pricing policy that will enable your low-calorie
microwavable food company to maximize profits. Provide a rationale
for your suggestion.
6.Outline a plan, based on the information provided in the scenario,
that the company could use in order to evaluate its financial
performance. Consider all the key drivers of performance, such as
company profit or loss for both the short term and long term, and the
fundamental manner in which each factor influences managerial
decisions.
7.Recommend two (2) actions that the company could take in order to
improve its profitability and deliver more value to its stakeholders.
Outline, in brief, a plan to implement your recommendations.
8.Use at least five (5) quality academic resources in this assignment.
Note: Wikipedia does not qualify as an academic resource.
Your assignment must follow these formatting requirements:
•Be typed, double spaced, using Times New Roman font (size 12),
with one-inch margins on all sides; citations and references must
follow APA or school-specific format. Check with your professor for
any additional instructions.
56. •Include a cover page containing the title of the assignment, the
student’s name, the professor’s name, the course title, and the date.
The cover page and the reference page are not included in the
required assignment page length.
The specific course learning outcomes associated with this
assignment are:
•Analyze short-run and long-run production and cost functions.
•Apply macroeconomic concepts to changes in global and national
economies and how they affect economic growth, inflation, interest
rates, and wage rates.
•Evaluate the profit-maximizing price and output level for given
operating costs for monopolies and firms in competitive industries.
•Use technology and information resources to research issues in
managerial economics and globalization.
•Write clearly and concisely about managerial economics and
globalization using proper writing mechanics.
Click here to view the grading rubric.
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ECO 550 Week 6 DQ 1 Market Structures
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ECO 550 Week 6 Discussion 1
"Market Structures" Please respond to the following:
· * From the scenario, assuming Katrina’s Candies is operating in
the monopolistically competitive market structure and faces the
following weekly
demand and short-run cost functions:
57. VC = 20Q+0.006665 Q2 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
rounded to the nearest whole number.
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ECO 550 Week 6 DQ 2 Maximizing Revenue
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ECO 550 Week 6 Discussion 2
"Maximizing Revenue" Please respond to the following:
· * From the scenario, assuming Katrina’s Candies is operating in
the monopolistically competitive market structure and faces the
following weekly
demand and short-run cost functions:
VC = 20Q+0.006665 Q2 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
rounded to the nearest whole number.
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58. ECO 550 Week 7 DQ 1 Predicting Price-
Setting Strategies
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ECO 550 Week 7 Discussion 1
"Predicting Price-Setting Strategies" Please respond to the following:
· * From the scenario for Katrina’s Candies, determine the
importance of predicting the pricing strategies of rival firms in an
industry characterized
by mutual interdependence. Provide a rationale for your response.
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ECO 550 Week 7 DQ 2 Price-Setting
Strategies
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ECO 550 Week 7 Discussion 2
"Price-Setting Strategies" Please respond to the following:
59. · Examine the common price setting strategies of airlines that use
game theory.
Predict the potential effects of such pricing strategies on the demand
for seats, and conclude the resulting impact on the profitability of the
airlines.
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ECO 550 Week 8 DQ 1 Entering a Merger
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ECO 550 Week 8 Discussion 1
"Entering a Merger" Please respond to the following:
· * From the scenario for Katrina’s Candies, examine the major
implications for firms entering into a merger.
Explain the criteria the U.S. Department of Justice and the Federal
Trade Commission would follow when deciding on whether or not to
approve a proposed merger.
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ECO 550 Week 8 DQ 2 Organizational Form
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60. ECO 550 Week 8 Discussion 2
"Organizational Form" Please respond to the following:
· Examine two (2) organizational forms of business (e.g.,
functional, product, etc.). Predict the possible implications of the
principal agent relationship for
each of these organizational forms of business. Determine which of
the organization forms would have more of an economic impact on
the operations of the
firm and its ability to maximize profits. Provide a rationale for your
response.
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ECO 550 Week 9 Assignment 3 Long Term
Investment Decision (2 Papers)
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This Tutorial contains 2 Different Papers
Assume that the low-calorie microwavable food company from
Assignments 1 and 2 wants to expand and has to make some long-
term capital budgeting decisions.
Use the Internet and Strayer databases to research government
policies and regulation.
Write a six to eight (6-8) page paper in which you:
1. Outline a plan that managers in the low-calorie microwaveable
food company could follow when selecting pricing strategies for
61. making their products as inelastic as possible. Provide a rationale for
your response.
2. Examine the major effects that government policies have on
production and employment. Predict the potential effects that
government policies could have on your company.
3. Determine whether or not government regulation to ensure fairness
in the low-calorie microwavable food industry is needed. Cite the
major reasons for government involvement in a market economy.
Provide two (2) examples of government involvement in a similar
market economy to support your response
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ECO 550 Week 9 DQ 1 Impact of Government
Regulation
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ECO 550 Week 9 Discussion 1
"Impact of Government Regulation" Please respond to the following:
· * From the scenario for Katrina’s Candies, take a position as to
whether government regulation is constraining or enabling in this
situation, as it relates
to the operational efficiency of the company. Speculate on the
fundamental manner in which government regulation could impact
the shareholders’ wealth and profitability
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62. ECO 550 Week 9 DQ 2 Government
Regulation
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ECO 550 Week 9 Discussion 2
"Government Regulation" Please respond to the following:
· From the e-Activity, take a position on whether the banking
industry needs more or less government regulation.
Support your position with two (2) examples of the impact of
regulation.
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ECO 550 Week 10 DQ 1 Long-Term
Investment
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ECO 550 Week 10 Discussion 1
"Long-Term Investment" Please respond to the following:
63. · * From the scenario for Katrina’s Candies, suggest one (1)
method in which Herb could use a cost-benefit analysis to argue for or
against an expansion.
Create three (3) optimal decision rules for Katrina’s Candies (e.g.,
whether to hire more staff or hire temporary workers to meet
production schedules).
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ECO 550 Week 10 DQ 2 Cost-Benefit Analysis
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ECO 550 Week 10 Discussion 2
"Cost-Benefit Analysis" Please respond to the following:
· Assess both the short-term and the long-term costs and benefits
of obtaining a graduate degree.
Support your decision to obtain a graduate degree with a cost-benefit
analysis of your particular situation.
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ECO 550 Week 11 DQ 1 Transfer It
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64. ECO 550 Week 11 Discussion 1
"Transfer It" Please respond to the following:
· Propose two (2) applications of the knowledge that you have
learned in this course to your current or a future position. Provide a
rationale for your response.
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ECO 550 Week 11 DQ 2 Best Practices
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ECO 550 Week 11 Discussion 2
"Best Practices" Please respond to the following:
· Create a list of three (3) best practices to follow in the field of
managerial economics and globalization. Provide a rationale for your
response.
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