Question

Chapter 10

1) Explain and Graph an event which leads to higher prices and lower quantity produced of a certain good.

2) Explain and graph an event which leads to lower prices and lower quantity produced of a certain good.

3) Explain and graph an event which leads to lower prices and higher quantity produced of a certain good.

4) Explain and graph an event that leads to higher prices and a higher quantity produced of a certain good.

Chapter 11-

1) Suppose you have a property that you rent out for $50,000 a year. Property taxes and utilities are paid by you and run $15,000 and $7000 respectively. Another tenant has offered to pay $30,000 per year but will pay the taxes and utilities. Assuming you decide to keep the existing tenant. Calculate accounting profit. Calculate economic profit, assuming you keep the existing tenant. Did you make a wise choice?

Chapter 12-

1) Calculate the profit maximizing price for the following scenarios: a) MC : $35 E: - 3.45 b) MC: $2.50 E: -1.05 c) MC: $350 E: - 35.50 2) The market elasticity of a product is determined to be -.50. The following firms compete in this area: Bob, Inc - 22% market share Bill, Inc. - 18% market share Jim, Inc. - 20% market share Calculate the individual firm elasticity for each.

3) Using the data from 2) assume that all 3 firms face a $10 MC calculate the profit maximization price.

4) Bill, Inc. has adopted lean management practices and reduced their marginal cost to $9.00. What are the implications to the price they can charge and for the firm?

Answer 1

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10.