1. A large media company is employing three PR managers, each earning $250 per day. Due to the pandemic and the increased demand for TV shows, a fourth manager needs to be hired. The company is aware that PR managers in the media industry know each other well. It is also common knowledge that PR managers can get quite jealous and would refuse to work if not paid the same salary as their peers in the same firm. A PR manager has been interviewed for the fourth position and would be willing to join the media company for a salary of 300$ per day. The three PR managers already employed learnt about this request. What is the marginal cost (per day) of hiring the fourth PR manager?

1. $200
2. $250
3. $300
4. $450
5. $550

2. FoisPas, a French restaurant in Westwood, has decided to increase the price of its Sunday brunch from $30 to $34. Following this price increase, the number of reservations on a typical Sunday dropped from 60 to 55. Which statement is correct?

1. FoisPas faces a horizontal demand curve
2. The total costs faced of FoisPas on a typical Sunday must have increased for sure
3. FoisPas was initially maximizing revenues, as demand was unit-elastic at the initial price
4. The price increase had a positive impact on total revenue as demand was inelastic at the initial price
5. The price increase led to a decrease in total revenues as demand was elastic at the initial price

3. A craft chocolate producer considers hiring one extra worker in production. Currently, the shop is selling 200 chocolate bars per day at a price of $6. With one extra worker, the manager estimates that they would be able to increase the output to 250 chocolate bars per day and that they would need to lower the price to $5.50 in order to sell them. The daily salary of this new employee would be the same as for the existing ones: $150. What should the manager do?

1. Increase its selling price
2. Hire the extra worker
3. Increase the salary of all employees
4. Reduce the number of workers working in his chocolate place
5. Turn down the new worker and maintain the same number of employees

4. Gooble Pay is a pay-per-view movie provider that has zero marginal cost and faces the following (inverse) demand function for its representative movie watcher:. Gooble Pay decides to use volume pricing to maximize profits. What is the optimal flat fee Gooble Pay should charge the representative watcher for unlimited access?

1. $500
2. $25
3. $20
4. $50
5. $1,000

5. A shoe store sells 250 pairs of sneakers per month at a per-unit price of $115. This is the price and quantity at which profits are maximized. The owner needs to pay a monthly rent of $5,500 whether the store stays open or not, and the rental contract cannot be canceled in the near future. The total variable cost (TVC) of the shoe store is $25,000 per month. What should the owner of the store do in the short run?

1. Close the store
2. Sell fewer pairs of shoes
3. Keep the store open even though negative profits are being made
4. Decrease the price and sell more shoes
5. Continue to produce even in the long run, as the store is making positive profits