COBU 220

100 Points Homework (Assessment questions)

1. Suppose you are the manager of a restaurant that serves an average of 400 meals per day at an average price per meal of $20. On the basis of a survey, you have determined that reducing the price of an average meal to $18 would increase the quantity demanded to 450 per day.

1. Compare the price elasticity of demand between these two points.

1. Would you expect total revenues to rise or fall? Explain.

1. Suppose you have reduced the average price of a meal to $18 and are considering a further reduction to $16. Another survey shows that the quantity demanded of meals will increase from 450 to 500 per day. Compute the price elasticity of demand between these two points.

1. Would you expect total revenue to rise or fall as a result of this second price reduction? Explain.

1. The table shows the total utility (TU) that James receives from consuming different amounts of two goods X and Y, per month.

Quantity	TUx	MUx	MUx/Px	TUy	MUy	MUy/Py
0	0			0
1	50			75
2	88			117
3	121			153
4	150			181
5	175			206
6	196			225
7	214			243
8	229			260
9	241			276

1. Fill in the other columns of the table by calculating the marginal utilities for goods X and Y and the ratios of marginal utilities to price for the two goods. Assume that the price of both goods X and Y is $3.

1. If James allocates $30 to spend on both goods, how many units will he buy of each?

1. How much will James spend on each good at the utility maximizing combination?

1. How much total utility will James experience by buying the utility-maximizing combination?

1. Suppose the price of good Y increases to $6. How many units of X and Y will he buy to maximize his utility now?

1. The table below shows how the number of university classrooms cleaned in an evening varies with the number of janitors:

Janitors per evening	0	1	2	3	4	5	6	7
Classrooms cleaned per evening	0	3	7	12	16	17	17	16

1. What is the marginal product of the second janitor?

1. What is the average product of four janitors?

1. Is the addition of the third janitor associated with increasing, diminishing, or negative marginal returns? Explain.

1. Is the addition of the fourth janitor associated with increasing, diminishing, or negative marginal returns? Explain.

1. Is the addition of the seventh janitor associated with increasing, diminishing, or negative marginal returns? Explain.

1. The graph shows the perfect competition market.

1. The exhibit shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. The firm will produce _______ units of output per day.

1. The exhibit shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. The firm's total revenue per day is:

1. The exhibit shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. The firm's total cost per day is:

1. The exhibit shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. The firm's total profit per day is:

1. Please consider the following top five companies in terms of market values in the US markets - Apple, Amazon, MS, Google, and Facebook - and analyze them how they move in the different or same ways using the data of them over the past five years. You can use any resources to get the data of these markets such as Morningstar, Mergent Online, Yahoo Finance, Chaikin, Finviz, CNBC,... You need to provide your recommendation using tables or charts.