Question

MANAGERIAL ECONOMICS EXAM 1-12 QUESTIONS

1. The following two linear functions represent a market (thus one is a supply function, the other a demand function). Circle the answer closest to being correct. Approximately what will suppliers willingly supply if the government controls the market price to be $3.00 (You must first find the market equilibrium price and quantity in order to see how the $3.00 relates to them)?

Q = 100 – 4.6P and Q = 75 + 6.2P

2. There has been a change in the market (represented in 1 above). The change is represented by the following two equations. Circle the one correct conclusion that describes the market change.

                                    Q = 90 + 6.2P   and Q = 110 – 4.6P

3. Circle the function on the answer sheet that represents the marginal revenue (MR) function for this demand function: Q = 75 – 7P

4. Circle the quantity that maximizes total revenue (TR) for the marginal revenue (MR) function selected in number three (3).

5. If supply decreases but demand remains the same, we can conclude that the new equilibrium:

Answer 1

1) a= 100 - 4.6P and on 75+ 6.29 aa= ss (In equilibrium) 100- 4.6 P = 75+ 6.2P 100- 75 = 6.2P + 4.6 25 = 10.8 P=25/10.8 Jp = 2.31 Q = 75+ 6.212-317 = 75 +14-32 a = 89.32 I At P= 3, og = 100 - 4.6132 = 100 - 13.8 = 86.2 os = 75+ 6.2132 = 75+ 18.6 = 93.6 At p=3 producers are wining to supply 93.6 units of the good while consumers demand is 86.2 which mean os > 09 surpeus = 93.6- 86.2 = 4.28 we can conclude that there is surplus of 4.28 at P=3

2) Equ.) ad: Q = 11o- 4.6P ss: a = got 6.2P 110 4.6P = got 6.2P 120- go = 6.2 P + 4.6P 20 = 10.89 P= 20 20.8 1P = 1.85 Q = 90 +6.2*1.85 a= got 11. 28 1Q = 101.28 At p=3, 04 = 110 - 4.6 (3) = 120 - 13.8 = 96.2 OS = got 6.2(3) = 96+ 18.5 = 108.6 At p=3 producers suppey 108.6 units of the commodity while consume 2 dem and 101.28 units which means os > od surbur = 108.96 - 101.28 - 7.32 . So again there is suspues of 7.32 at P=3

0= 10 = 75 - 15 – 6 тка РА = (55) MQ = 15- 24 TR :. is maximum when nr=0 25 -28. - о 15- 2 0 - 0 75 = 2.0 S = 31:5 So at a = 37.5 FW Лами Maxj TOR is u'юу яна ин

SS DD The initial equilibrium is at point A and the corrensponding equilibrium рло ала 4 цаинін ала р” 8 @* respectively. If supply decreases then supply unne Shifts tow and left from ss to ss. The equilibrium point moves from point A to A Equilibrium quantity decreases from a to o' and equilibrium price increases from pa to op So we can conclude that the suppey leads to fall in quantity and increase in decreare in equilibrium equilibrium price.