Questions and Answers of Managerial Economics 15th

(b) Determine the firm’s profit maximizing output level.
(a) Determine the firm’s revenue (r) function.
5 Suppose a firm facing inverse demand curve p = 10 − 2q has a cost function given by c = 5 + q.
(d) Determine the marginal cost (MC) function.
(c) Determine the average fixed cost (AFC), average variable cost (AVC), and average cost (AC) functions.
(b) Determine the fixed cost (cF) and variable cost (cV) functions.
(a) Is this a short-run or long-run cost function? Explain.
4 Suppose a firm has a cost function given by c = 2q2.
(d) Determine the marginal cost (MC) function.
(c) Determine the average fixed cost (AFC), average variable cost (AVC), and average cost (AC) functions.
(b) Determine the fixed cost (cF) and variable cost (cV) functions.
(a) Is this a short-run or long-run cost function? Explain.
3 Suppose a firm has a cost function given by c = 5 + q.
2 Suppose a firm faces an inverse demand given by p = 10 − 2q. Calculate the firm’s revenue (r) function. Plot the revenue function by calculating the points on the function for q = 0,1,2,3,4,5
1 Fill in the five cells of Table 3.1 with examples of your own. That is, give examples of homogeneous products producing industries with many and a few firms, examples of differentiated products
(b) What would happen if a crash in technology shares caused the stock price to fall below ?
(a) How might this strategy resolve the agency problem between owners and managers?
2 In some large companies, managers are given the option of buying stock in their company at a pre-determined set price per share.
1 Suppose that all Internet Service Providers (ISPs) were required to have a license issued by the government, for which the government charged a price . If the government made very large, would you
(e) Which scheme – price support or quota – will farmers prefer, if any?Explain.
(d) Suppose the government proposes a quota system to deal with the over-supply arising from the price support scheme. Assuming one quota per 100,000 liters of milk, how many quotas will be issued to
(c) Suppose farmers successfully lobby to have a price-support scheme implemented and that the support price is set at $3 per liter.Determine domestic demand, output, and, hence, calculate the daily
(b) Suppose imports of milk are banned. Calculate equilibrium price and output.
(a) Calculate the equilibrium price, output, and demand when foreign milk is allowed into the domestic market. How much milk will be imported in this case?
Suppose that the world price of milk is $1 per liter.
4 Suppose the daily demand for milk in your local town is given:where units are millions of liters. The national supply curve of milk is given:
(d) Sketch a diagram illustrating equilibrium before the price ceiling is imposed and showing the black-market price, quantity, and profits.
(c) Assuming black marketeers buy the entire legal output, find the blackmarket price and, hence, determine the profits of the black marketeers.
(b) If the government sets a price ceiling at $40, determine the excess demand that occurs.
(a) Calculate equilibrium price and quantity.
3 Suppose demand and supply for a product are given:
(d) Determine tax revenue and tax incidence on producers and consumers.
(c) Graph the supply function and the demand function before and after the tax is imposed. Show on the diagram the equilibrium prices with and without the tax.
(b) Suppose a tax of 25 percent of the purchase price is applied to the good and that producers are required to collect the tax. (Assume income remains at $40,000.) Determine the new equilibrium
(a) If average household income is $40,000, calculate the equilibrium price and quantity.
2 Suppose demand and supply for a product are given:where Y stands for average household income.
(f) Sketch the pre-tax and post-tax equilibria on a diagram showing the demand and supply curves, the prices paid by the consumer, the prices received by the producer, and the tax.
(e) Calculate the percent of the tax that is shifted to the consumer and the percent that is borne by the producer.
(d) Suppose a tax of $0.25 per unit is levied on this good and that producers are required to collect the tax. Calculate the new equilibrium price and quantity in the market. (Hint: Before the tax
(c) Calculate the price elasticity of demand at the equilibrium price and quantity. Is demand elastic at this point?
(b) Calculate the equilibrium price and quantity.
(a) Identify which of the two equations is the demand function and which is the supply function.
1 Given the following two equations:
Taxesa. Impede the movement of assets to higher-valued uses.b. Reduce incentives to work.c. Decrease the number of wealth-creating transactions.d. All of the above.
How is a price–consumption curve related to a demand curve?

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