question

You are currently the manager at SkyZone, a trampoline jumping warehouse. Your firm is deciding whether to build a new warehouse on some land the firm already owns in Vermillion The warehouse will cost $1 million to build and will generate $200,000 in operating profits each year for 5 years. At that point the trampolines will have worn out and the warehouse will be useless. The trampolines' metal frames can be recycled and would earn $100,000 from a scrap metal purchaser. The firm will keep the land (you can ignore the land value in this problem) What is the net present value of this warehouse investment (rounded to the nearest dollar) assuming a discount rate of 5%?

answer

-$55,752

question

A coin is flipped twice. What is the probability that the coin will come up heads on the first flip and then tails on the second flip?

answer

25%

question

How much will $1,000 saved today be worth 10 years from now if you earn a 5% annual interest rate (compounded annually) over that time period?

answer

$1,628.89

question

A vegan ice-cream shop wants your help managing their inventory. They sell only a single flavor per day and no flavor is ever served twice. As a result, if they over-produce they will be left with wasted product, but if they produce too little they will upset some customers who might not return (not to mention they will miss out on profits!). A vegan ice cream cone sells for $5.00 and costs $0.50 to produce. Based on their past sales data (summarized in the table below), what is the profit-maximizing quantity of vegan ice cream cones to carry in the store each day?

Qsold Probability of Qd Prob selling more Prob selling less

100 10% 100% 0%

110 20% 90% 10%

120 60% 70% 30%

130 10% 10% 90%

Qsold Probability of Qd Prob selling more Prob selling less

100 10% 100% 0%

110 20% 90% 10%

120 60% 70% 30%

130 10% 10% 90%

answer

130

question

Will works for a hedge fund and earns a base salary of $100,000. Every February he is evaluated and possibly earns a bonus. His boss tells him he is "50% sure" Will is going to be awarded a bonus, but doesn't say how much. From past experience, Will knows bonuses can be anywhere from $50,000 to $100,000 and he thinks there is an equal probability that it will be any number between those two values. How much money does Will expect to earn this year between?

answer

$137,500

question

Tibbet Sports is a single-location retailer carrying sporting goods, including football helmets. Tibbet will sell 900 helmets this year but cannot fit that many helmets in their store. The fixed cost of ordering more helmets from their distributor is $20 and the annual carrying cost of keeping a helmet in the store is $40. Given this information and using the economic order quantity model, what is the cost-minimizing number of helmets Tibbet Sports should order from their distributor each time they run out of inventory?

answer

30 helmets

question

What is the expected value (rounded to the nearest dollar) of purchasing a 10 year annuity today that will pay $10,000 annually (first payment is one year from today) if your annual discount rate is 10%?

answer

$61,446

question

The figure below shows the two potential demand curves and the marginal cost curve for the production of grapes by your vineyard.

(image with green line DH at $3,000 P, Red DL at $1,000 and then MC from $500 to 600Q. Cross at 1000;100 and 3000;500)

If the probability of demand being high, DH, is

40 percent and the probability of demand

being low, DL, is 60 percent, what quantity of

grapes maximizes your expected profit?

(image with green line DH at $3,000 P, Red DL at $1,000 and then MC from $500 to 600Q. Cross at 1000;100 and 3000;500)

If the probability of demand being high, DH, is

40 percent and the probability of demand

being low, DL, is 60 percent, what quantity of

grapes maximizes your expected profit?

answer

260 tons of grapes per year

E[MR] = ($3,000 per ton x 0.40) + ($1,000 per ton x 0.60) = $1,800 per ton. This means that the vineyard should produce 260 tons of grapes per year, according to the marginal cost curve.

E[MR] = ($3,000 per ton x 0.40) + ($1,000 per ton x 0.60) = $1,800 per ton. This means that the vineyard should produce 260 tons of grapes per year, according to the marginal cost curve.

question

Suppose there are only two companies in the whole world that manufacture and sell hoverboards: ABC Corp and XYZ Inc. Both companies have similar technology that allows them to make hoverboards for $20 each. Neither firm has any fixed costs. The worldwide demand for hoverboards is pretty low now that they are known to catch fire. It can be expressed by the inverse demand function below:

P(Q)=200 - Q

If XYZ Inc. has announced that it will produce 100 hoverboards, what is the best response (production level) for ABC Corp?

P(Q)=200 - Q

If XYZ Inc. has announced that it will produce 100 hoverboards, what is the best response (production level) for ABC Corp?

answer

40 Hoverboards

question

The Ellsworth Creamery makes cheese curds at three locations. The marginal costs of producing 100lb cases of cheese curds at each facility (where q represents the numberof 100lb cases of cheese curds) are listed below:

A: MCa(q)=5+q

B: MCb(q)=1/60*q^2

C: MCc(q)=3/2*q^2

If the competitive price for a 100lb case of cheese curds is $60, how many 100lb cases will Ellsworth Creamery produce across all of their facilities?

A: MCa(q)=5+q

B: MCb(q)=1/60*q^2

C: MCc(q)=3/2*q^2

If the competitive price for a 100lb case of cheese curds is $60, how many 100lb cases will Ellsworth Creamery produce across all of their facilities?

answer

125 cases

question

You run a waterpark. Each year, your waterpark hosts 100,000 guests. Each guest pays $25 to enjoy the waterpark and your (constant) marginal costs are $10 per guest. The fixed costs of operating the park for the year are $500,000. Sadly, 1 out of every 100 guests will fall off a waterslide during their visit to your park and of those who fall off a waterslide 1 out of 10 will sue you. Of those who sue, 1 out of 100 will win the suit and will be awarded exactly $500,000. Based on this information, what is your expected profit per guest?

answer

$5.00 or $15.00

question

You work at a firm that makes fountain pens. The marginal cost of producing a fountain pen at your firm is given by the equation:

MC = 5 + .01q

The price people will pay for a fountain pen varies from year to year depending on what happens at the annual hipster convention. There, a buffalo nickle is flipped and in years when it lands "tails" up, the price of a fountain pen will be $50, however in all other years the price will be $40. Sadly, you must make your production decision before these coins are flipped. You do your best to maximize profits by setting E[MR] = MC, but you are always off a bit. What would be the value of changing the timing of your production run in order to know exactly what the price of a fountain pen will be?

MC = 5 + .01q

The price people will pay for a fountain pen varies from year to year depending on what happens at the annual hipster convention. There, a buffalo nickle is flipped and in years when it lands "tails" up, the price of a fountain pen will be $50, however in all other years the price will be $40. Sadly, you must make your production decision before these coins are flipped. You do your best to maximize profits by setting E[MR] = MC, but you are always off a bit. What would be the value of changing the timing of your production run in order to know exactly what the price of a fountain pen will be?

answer

$1,250

question

You work at a small restaurant that wants to advertise all of their soda options. They currently have a soda machine that houses 12 different types of soda, and a nozzle that allows any three of those 12 types to be poured together at once. How many unique flavor options can your restaurant honestly advertise as being able to pour?

answer

220 unique flavor combinations

question

Every year Dave's grandmother sends him a $25 check. Dave is an impatient person and has a discount rate over future income of 25%,. If both Dave and his grandmother live forever, what is the present discounted value of all of the birthday checks Dave will receive in his infinite lifetime?

answer

$100

question

Your boss needs your help calculating the present value of some future revenue. She tells you to assume a discount rate of 5% for all calculations and wants to know the present value of revenue that will be earned 8 years from now. What discount factor should you use to discount those future revenues back to present dollars?

answer

0.6768

question

Suppose a supplier has an agreement with a firm to be paid $3,500 in 2 years. If the annual interest rate is 4 percent, the supplier would be indifferent between receiving ________ now and waiting 2 years to receive the $3,500.

answer

$3,235.95

question

Refer to the table above. If A = 6 and B = 8, which of the following is true?

Input 1 Input 2 Input 3

Price $10 $15 $20

MP 4 A B

Input 1 Input 2 Input 3

Price $10 $15 $20

MP 4 A B

answer

The firm is minimizing costs.

question

Suppose that GNV Pool owns the only community pool in Gainesville, FL. The market demand for annual passes to this pool is Q = 600 - 2P where Q is the quantity of annual passes demanded and P is the per-pass price. GNV Pool knows that it has a total cost of providing annual passes equal to

TC(q)=25,000+(1/4)q^2

What is the profit-maximizing quantity of passes that GNV pool will sell?

TC(q)=25,000+(1/4)q^2

What is the profit-maximizing quantity of passes that GNV pool will sell?

answer

200

question

Suppose that GNV Pool owns the only community pool in Gainesville, FL. The market demand for annual passes to this pool is Q = 600 - 2P where Q is the quantity of annual passes demanded and P is the per-pass price. GNV Pool knows that it has a total cost of providing annual passes equal to

TC(q)=25,000+(1/4)q^2

What is GNV pool's profit or loss at the profit-maximizing quantity?

TC(q)=25,000+(1/4)q^2

What is GNV pool's profit or loss at the profit-maximizing quantity?

answer

$5,000 profit

question

At the profit maximizing level of output, a monopoly firm has a marginal cost of production for the last unit sold of $2 and the elasticity of demand at this quantity is equal to 2. What is the per-unit price at which this firm is selling its output?

answer

$4.00

question

The demand curve for a monopolist is given by P=50-Q. Their marginal cost is given by MC=10. The firm has no fixed costs. What will the firm's profits equal?

answer

$400

question

Big Waves is a large water park. Suppose the individual demand for entrance into Big Waves is Qd = 50 - (2 × P) and each consumer has the same demand. Big Waves has a constant marginal cost of $5 per consumer. If Big Waves practices two-part pricing and requires a membership fee and then a separate entrance fee, what is the profit-maximizing membership fee?

answer

$400

question

Suppose there are only two companies in the whole world that manufacture and sell hoverboards: ABC Corp and XYZ Inc. Both companies have similar technology that allows them to make hoverboards for $20 each. Neither firm has any fixed costs. The worldwide demand for hoverboards is pretty low now that they are known to catch fire. It can be expressed by the inverse demand function below:

P(Q)=200−Q

Suppose that ABC Corp. and XYZ Inc. are able to form a cartel. If they split the market evenly and each produce the profit maximizing quantity of hoverboards, how much more profit will each firm make when colluding to sell hoverboards as compared to the Cournot-Nash equilibrium where they compete on quantity?

P(Q)=200−Q

Suppose that ABC Corp. and XYZ Inc. are able to form a cartel. If they split the market evenly and each produce the profit maximizing quantity of hoverboards, how much more profit will each firm make when colluding to sell hoverboards as compared to the Cournot-Nash equilibrium where they compete on quantity?

answer

$450

question

The figure above shows the wholesale demand and marginal revenue curves for Slick Shades Sunglasses, a sunglasses firm with market power. Slick Shades Sunglasses has a constant marginal cost of production and it sells to perfectly competitive independent retail distributors that have a constant marginal cost of distribution.

Slick Shades has a constant marginal cost of production equal to $40 and the distributors have a constant marginal cost of distribution equal to $20. If Slick Shades is producing the profit-maximizing number of sunglasses (in hundreds) and charging the profit-maximizing wholesale price, what is the retail price?

MR down 0,200 to 95,0

Ddown 0,200 to 90,110

Slick Shades has a constant marginal cost of production equal to $40 and the distributors have a constant marginal cost of distribution equal to $20. If Slick Shades is producing the profit-maximizing number of sunglasses (in hundreds) and charging the profit-maximizing wholesale price, what is the retail price?

MR down 0,200 to 95,0

Ddown 0,200 to 90,110

answer

$140

question

You are invited to play a lottery. Entering the lottery costs $25 and you will receive an amount in return for the number you roll on a six-sided die, with you being entitled to $10 times the number you roll. Rolling a 1 pays $10, rolling a 2 pays $20, rolling a 3 pays $20, and so on. What is the expected value of entering this lottery?

answer

$10

There are 6 possible outcomes. In two of them you lose money, in the other four you will make profits. The expected value comes from the sum of (payoff - 25)x(1/6) for each possible (10 - 25)x(1/6) + (20 - 25)x(1/6)+(30- 25)x(1/6)+(40 - 25)x(1/6)+(50 - 25)x(1/6)+(60 - 25)x(1/6) = $10

There are 6 possible outcomes. In two of them you lose money, in the other four you will make profits. The expected value comes from the sum of (payoff - 25)x(1/6) for each possible (10 - 25)x(1/6) + (20 - 25)x(1/6)+(30- 25)x(1/6)+(40 - 25)x(1/6)+(50 - 25)x(1/6)+(60 - 25)x(1/6) = $10

question

Suppose that you are a manager at the only Ford dealership in Great Falls, Montana. Your service department is closed on Saturday, but you are considering whether to open. If you do, you estimate there are three possibilities: (1) You attract little business, so you have only 20 new Saturday customers each month; (2) you attract some business, so you have 40 new Saturday customers each month; or (3) your initiative is a

resounding success, with 100 new Saturday customers each month. If the probability of outcome 1 is 25 percent, the probability of outcome 2 is 50 percent, and the probability of outcome 3 is 25 percent, what is your expected number of customers?

resounding success, with 100 new Saturday customers each month. If the probability of outcome 1 is 25 percent, the probability of outcome 2 is 50 percent, and the probability of outcome 3 is 25 percent, what is your expected number of customers?

answer

50

This is nearly identical to the solved problem on page 600 of the textbook. The calculation is EV = (1/4)20 + (1/2)40 + (1/4)100 = 50

This is nearly identical to the solved problem on page 600 of the textbook. The calculation is EV = (1/4)20 + (1/2)40 + (1/4)100 = 50

question

Casino War is a card game played with a single 52 card deck. The cards are ranked in the same way that cards in poker games are ranked, with aces being the highest cards. One card each is dealt to a dealer and to a player. If the player's card is higher, he or she wins the wager they bet. However, if the dealer's card is higher, the player loses their bet. A tie occurs when the dealer and the player each have cards of the same rank. In a tie situation, the player has two options:

The player can surrender, in which case the player loses half the bet.

The player can go to war, in which case the player must double his stake.

If the player continues play in view of a tie, the dealer burns (discards) three cards before dealing each of them an additional card. If the player's card is ranked higher than the dealer's, then the player wins the amount of his original wager only. If the dealer's card is ranked higher than the player's, the player loses his (doubled) wager. If the ranks are equal, then the player wins the amount of his doubled wager.

What is the expected value of betting $10 on this game if the player knows they will surrender in the event of a tie? Round all probabilities to the nearest whole number value (i.e. 46% or .46, not 46.2% or .46234)

The player can surrender, in which case the player loses half the bet.

The player can go to war, in which case the player must double his stake.

If the player continues play in view of a tie, the dealer burns (discards) three cards before dealing each of them an additional card. If the player's card is ranked higher than the dealer's, then the player wins the amount of his original wager only. If the dealer's card is ranked higher than the player's, the player loses his (doubled) wager. If the ranks are equal, then the player wins the amount of his doubled wager.

What is the expected value of betting $10 on this game if the player knows they will surrender in the event of a tie? Round all probabilities to the nearest whole number value (i.e. 46% or .46, not 46.2% or .46234)

answer

-$0.30

There is a 3/51 chance of a tie. There is a (1-(3/51))/2 chance that you will win and walk away with your wager plus that of the dealer = $20, and a (1-(3/51))/2 chance you will lose and walk away with $0. In the event of the tie, you walk away with $5. No matter what, you are out the $10 you paid to play. You will expect to win $9.70, but since it will cost $10 to play, you expect to lose money.

There is a 3/51 chance of a tie. There is a (1-(3/51))/2 chance that you will win and walk away with your wager plus that of the dealer = $20, and a (1-(3/51))/2 chance you will lose and walk away with $0. In the event of the tie, you walk away with $5. No matter what, you are out the $10 you paid to play. You will expect to win $9.70, but since it will cost $10 to play, you expect to lose money.

question

The figure below shows the two potential demand curves and the marginal cost curve for the production of grapes by your vineyard.

If the probability of demand being high, DH, is

40 percent and the probability of demand

being low, DL, is 60 percent, what quantity of

grapes maximizes your expected profit?

DM green at $3000, DL red at 1000, MC up from 0,500 to 600,3500

If the probability of demand being high, DH, is

40 percent and the probability of demand

being low, DL, is 60 percent, what quantity of

grapes maximizes your expected profit?

DM green at $3000, DL red at 1000, MC up from 0,500 to 600,3500

answer

260 tons of grapes per year

E[MR] = ($3,000 per ton x 0.40) + ($1,000 per ton x 0.60) = $1,800 per ton. This means that the vineyard should produce 260 tons of grapes per year, according to the marginal cost curve.

E[MR] = ($3,000 per ton x 0.40) + ($1,000 per ton x 0.60) = $1,800 per ton. This means that the vineyard should produce 260 tons of grapes per year, according to the marginal cost curve.

question

What is the probability of randomly drawing two cards from a standard deck of playing cards and both of the cards being aces?

answer

1/221

You have a 1/13 chance of drawing an ace initially. Having drawn an ace, you have a 3/51 chance of drawing another ace. This gives a probability of 3/663 = 1/221

You have a 1/13 chance of drawing an ace initially. Having drawn an ace, you have a 3/51 chance of drawing another ace. This gives a probability of 3/663 = 1/221

question

What is the probability of randomly drawing a card from a standard deck of playing cards, finding that it is an ace, then replacing it in the deck, randomly drawing another card, and finding that you have drawn an ace once more?

answer

1/169

You have a 1/13 chance of drawing an ace initially. Having drawn an ace and replacing it, you have a 1/13 chance of drawing another ace. This gives a probability of 1/169

You have a 1/13 chance of drawing an ace initially. Having drawn an ace and replacing it, you have a 1/13 chance of drawing another ace. This gives a probability of 1/169

question

Your bakery firm sells loaves of bread for $7.50, and the cost of producing each loaf is $1.50. If a loaf of bread is not sold the day it is produced, it is donated to a local food bank. Suppose that as a manager you use past sales data to estimate that the probabilities of selling different quantities of bread are the same probabilities shown in the table below. What is the profit-maximizing quantity of bread loaves to carry in inventory?

QDemanded Prob Demanded Prob more Prob Less

50 0.10 1.00 0.00

51 0.10 0.90 0.10

52 0.10 0.80 0.20

53 0.20 0.70 0.30

54 0.20 0.50 0.50

55 0.10 0.30 0.70

56 0.10 0.20 0.80

57 0.10 0.10 0.90

58 0.00 0.00 1.00

QDemanded Prob Demanded Prob more Prob Less

50 0.10 1.00 0.00

51 0.10 0.90 0.10

52 0.10 0.80 0.20

53 0.20 0.70 0.30

54 0.20 0.50 0.50

55 0.10 0.30 0.70

56 0.10 0.20 0.80

57 0.10 0.10 0.90

58 0.00 0.00 1.00

answer

56 loaves of bread

Your optimal inventory will be the quantity that sets E[MB] = E[MC], or (P - C)

Your optimal inventory will be the quantity that sets E[MB] = E[MC], or (P - C)

**Prob(QD >= Q**) = (C - PS)**Prob(QD < Q**).question

Suppose that Dave gets happiness from money according to the utility function U($) = $. This means that $25 worth of money gives him 25 units of happiness and $50 worth of money gives him 50 units of happiness. Suppose a casino lets him bet on the spin of a roulette wheel. He can bet $10 on black and will win $10 if the ball falls in a black bin, or lose his $10 if the ball falls in either a red or green bin. Suppose further that there are are 24 possible black bins, 24 red bins, and two green bins. How much would we expect playing this game would impact Dave's happiness?

answer

It makes him 0.40 units less happy if he plays the game vs. not playing the game.

He will lose 52% of the time and will win only 48% of the time. This means that he expects to lose $0.40 if he plays the game, which equates to .4 fewer units of happiness.

He will lose 52% of the time and will win only 48% of the time. This means that he expects to lose $0.40 if he plays the game, which equates to .4 fewer units of happiness.

question

Suppose that Dave gets happiness from money according to the utility function U($) = $. This means that $25 worth of money gives him 25 units of happiness and $50 worth of money gives him 50 units of happiness. Suppose a casino lets him bet on the spin of a roulette wheel. He can bet $10 on black and will win $X if the ball falls in a black bin, or lose his $10 if the ball falls in either a red or green bin. Suppose further that there are are 24 possible black bins, 24 red bins, and two green bins. What is the minimum amount of money $x that Dave would need to win in order to be willing to play this game? Round your answer up to the nearest penny.

answer

$10.84

He will lose 52% of the time and will win only 48% of the time. This means that he expects to lose $5.20 on any spin. His expected winnings must be just as large or larger to be willing to play. That means he must each x*(.48) = 5.2. Divide both sides by .48 to get x.

He will lose 52% of the time and will win only 48% of the time. This means that he expects to lose $5.20 on any spin. His expected winnings must be just as large or larger to be willing to play. That means he must each x*(.48) = 5.2. Divide both sides by .48 to get x.

question

Suppose when the price of pineapples goes from $5 to $3 per pineapple, production decreases from 3,500 pineapples to 2,000 pineapples per year. Using the mid-point method, the percentage change in price would be:

answer

-50%

question

a firm produces 400 books and sells each book for $15. if the explicit cost of producing the books is $4,500 and the implicit cost is $1,000, the firms economic profit is

answer

$500

question

At 100 units of output, a firm's total cost is $10,000. If the firm's total fixed cost is $4,000, its average variable cost is equal to

answer

$60

question

the following questions are based on the table below, which gives cost information for a perfectly competitive firm. if the product price is $85, how many units of output must the firm produce in order to maximize profits?

Q AFC AVC MC

0

1 100 55 55

2 50 45 35

3 33.33 50 60

4 25 55 70

5 20 60 80

6 16.67 65 90

Q AFC AVC MC

0

1 100 55 55

2 50 45 35

3 33.33 50 60

4 25 55 70

5 20 60 80

6 16.67 65 90

answer

5

question

if the marginal cost of producing the first unit of some good is $20 and the marginal cost of producing the second unit is $30, the average variable cost of producing two units is

answer

$25

question

if labor is the only variable input and it costs $15 per hour and if the marginal product of labor is 3 units per hour, the short-run marginal cost of 1 unit of output is approximately

answer

$5.00

question

Instead of being employed at a printing company at a salary of $25,000 per year, Sally starts her own printing firm. Rather than renting a building that she owns to someone else for $10,000 per year, she uses it as the location for her company. Her costs for workers, materials, advertising, and energy during her first year are $125,000. If the total revenue from her printing company is $155,000, her total economic profit is

answer

-$5,000

question

The table above shows the amount of labor inputs necessary to produce given levels of output. If the cost of a unit of labor is $20 and total fixed cost is $100, the average total cost of producing 20 units of output is

units input units output

1 8

2 20

3 30

units input units output

1 8

2 20

3 30

answer

$7

question

If the average variable cost of producing 4 burritos is $20 and the average variable cost of producing 5 burritos is $25, then the marginal cost of increasing output from 4 to 5 burritos is

answer

$45

question

Using Excel, the manager of Quick Breaks Coffees has estimated the daily demand function for its regular coffees; the results are shown in the table above. If a price of $5 is charged for the coffees, the predicted quantity demanded is ________.

Multiple R0.98

R Square0.96

Adjusted R Square0.95

Standard Error3.3Observations35

Coef StError tStat P lower upper

Intercept 170.03 3.19 53.16 0.00 163.53 176.54

Price -22.48 0.74 -30.11 0.00 -24.01 -20.96

Multiple R0.98

R Square0.96

Adjusted R Square0.95

Standard Error3.3Observations35

Coef StError tStat P lower upper

Intercept 170.03 3.19 53.16 0.00 163.53 176.54

Price -22.48 0.74 -30.11 0.00 -24.01 -20.96

answer

57.63

question

Refer to the table above. If A = 5, B = 7.5, and C = 20, which of the following is true?

Input 1 Input 2 Input 3

p 20 30 40

MP A B C

Input 1 Input 2 Input 3

p 20 30 40

MP A B C

answer

The firm should buy more of Input 3 and less of Inputs 1 and 2.

question

If the wage rate paid to a textile employee is $120 and the marginal product of a worker is 12 yards of fabric, this means that for each additional dollar spent on labor, there is a gain of ________ yards of fabric.

answer

0.1

question

If a 4 percent increase in the price of a good leads to a 1 percent decrease in the quantity demanded, the price elasticity of demand for the good equals ________.

answer

0.25

question

Suppose that XYZ Inc. has total costs that can be expressed as:

Tc(q)=10,000+2Q-3Q^2+4Q^3

If XYZ Inc. produces 10 units of output, what are the firm's average fixed costs?

Tc(q)=10,000+2Q-3Q^2+4Q^3

If XYZ Inc. produces 10 units of output, what are the firm's average fixed costs?

answer

$1,000

question

If the price of a bushel of sugar beets falls from $10.50 to $9.50, and that price drop causes the quantity of bushels demanded to increase from 188 to 212 bushels, then this means the price elasticity of demand for sugar beets is (use the arc elasticity formula)

answer

1.2

question

The demand for your product demands on three factors; the price of your good, the price of a related good, and the average income of your customers. Excel estimated the above linear demand for your product.

Refer to the table above. A $1 increase in the price of the related good will lead to a(n) ________ in the quantity demanded of your good by ________.

Multiple R0.99

R Square0.98

Adjusted R Square0.97

Standard Error2.52

Observations35

Coef StError t P Lower Upper

Intercept 131.92 17.76 7.43 0.00 97.11 166.73

Price Good -7.46 1.18 -6.34 0.00 -9.86 -5.06

Price Related 10.24 0.97 10.60 0.00 8.27 12.21

Income 0.30 0.10 3.00 0.01 0.10 0.50

Refer to the table above. A $1 increase in the price of the related good will lead to a(n) ________ in the quantity demanded of your good by ________.

Multiple R0.99

R Square0.98

Adjusted R Square0.97

Standard Error2.52

Observations35

Coef StError t P Lower Upper

Intercept 131.92 17.76 7.43 0.00 97.11 166.73

Price Good -7.46 1.18 -6.34 0.00 -9.86 -5.06

Price Related 10.24 0.97 10.60 0.00 8.27 12.21

Income 0.30 0.10 3.00 0.01 0.10 0.50

answer

increase; 10.24

question

If the Qd = (50 million) - (4 million × P) and QS = (0) + (1 million × P), the equilibrium price for the product is ________.

answer

$10

question

Suppose that the market for corn in Atlantis, a small closed economy, can be described by the following demand and supply equations where P is the price per unit of corn and Q is units of corn:

Demand: Q = 10,000 - 100P

Supply: Q = 100P - 2,000

If the government of Atlantis decides to implement a price support program in this market, which of the following statements is false (holding everything else constant)?

Demand: Q = 10,000 - 100P

Supply: Q = 100P - 2,000

If the government of Atlantis decides to implement a price support program in this market, which of the following statements is false (holding everything else constant)?

answer

If the price floor implemented is $80 per unit of corn, then the government will need to spend $80,000 to purchase all of the excess supply at that price.

question

$6.67

The managers of Movies Plus, a large movie theater, want to practice third−degree price discrimination. The managers have learned that college students have an own price elasticity of demand of 4.0 for tickets at Movies Plus and adults have an own price elasticity of 2.0. If the managers have correctly determined the third−degree profit−maximizing price for adults is $10, what is the third−degree profit−maximizing price to charge students?

A. $12.00

B. $15.00

C. $5.50

D. $6.67

The managers of Movies Plus, a large movie theater, want to practice third−degree price discrimination. The managers have learned that college students have an own price elasticity of demand of 4.0 for tickets at Movies Plus and adults have an own price elasticity of 2.0. If the managers have correctly determined the third−degree profit−maximizing price for adults is $10, what is the third−degree profit−maximizing price to charge students?

A. $12.00

B. $15.00

C. $5.50

D. $6.67

answer

$6.67

question

A small nation has three gasoline suppliers with a linear monthly market demand equal to: Q = 500,000 − 5P. Each firm's marginal cost (MC) and average total cost (ATC) curves are horizontal at $10,000 per month.

Refer to the information above. If the firms compete, what is the equilibrium quantity in the market?

A. 50,000

B. 450,000

C. 45,000

D. 500,000

Refer to the information above. If the firms compete, what is the equilibrium quantity in the market?

A. 50,000

B. 450,000

C. 45,000

D. 500,000

answer

450,000

question

The table shows the market demand for a product that both Firm X and Firm Y manufacture. Both firms produce an identical product and the firms' average total and marginal cost are equal and constant.

If this market is a Cournot Oligopoly and Firm X is produces 50 units, what is Firm Y's profit−maximizing quantity if their average total and marginal cost are constant and equal to $60?

Price market Demand

100 0

90 50

80 100

70 150

60 200

A. 200

B. 50

C. 150

D. 100

If this market is a Cournot Oligopoly and Firm X is produces 50 units, what is Firm Y's profit−maximizing quantity if their average total and marginal cost are constant and equal to $60?

Price market Demand

100 0

90 50

80 100

70 150

60 200

A. 200

B. 50

C. 150

D. 100

answer

100

question

A small nation has three gasoline suppliers with a linear monthly market demand equal to: Q = 500,000 − 5P. Each firm's marginal cost (MC) and average total cost (ATC) curves are horizontal at $10,000 per month.

Refer to the information above. What is slope of the demand curve?

A. 0.20

B. 5

C. −5

D. −0.20

Refer to the information above. What is slope of the demand curve?

A. 0.20

B. 5

C. −5

D. −0.20

answer

−0.20

question

Suppose a uni-variate regression is run with N=100 data points, yielding a coefficient estimate for the X variable of 2.5. The standard error associated with this estimate was calculated to be 1.2. Which of the following ranges represents the 95% confidence interval associated with this coefficient estimate?

(-1.2, 1.2)

(1.3, 3,7)

(2.5, 4.85)

(0.15, 4.85)

(-1.2, 1.2)

(1.3, 3,7)

(2.5, 4.85)

(0.15, 4.85)

answer

(0.15, 4.85)

question

Suppose when the price of pineapples goes from $5 to $3 per pineapple, production decreases from 3,500 pineapples to 2,000 pineapples per year. Using the mid-point method, the percentage change in price would be:

-0.50

-50%

0.54

54%

-0.50

-50%

0.54

54%

answer

-50%

question

The demand curve for a monopolist is given by P=50-Q. Their marginal cost is given by MC=10. The firm has no fixed costs. What will the firm's profits equal?

$0

$200

$400

$600

$0

$200

$400

$600

answer

$400

question

An economic analyst for XYZ Inc. has estimated that company's demand function for their flagship product, the Widget:

QWidgets=12,000−3PWidgets+P−M+2A

In the demand function, P is the price of good Y, M is the income of consumers in the area, and A is the amount of money XYZ Inc. spends advertising Widgets.

Given this information, what is the slope of the demand curve for Widgets?

−3

2

−1/3

−1

QWidgets=12,000−3PWidgets+P−M+2A

In the demand function, P is the price of good Y, M is the income of consumers in the area, and A is the amount of money XYZ Inc. spends advertising Widgets.

Given this information, what is the slope of the demand curve for Widgets?

−3

2

−1/3

−1

answer

-1/3

question

An economic analyst for XYZ Inc. has estimated that company's demand function for their flagship product, the Widget:

QWidgets=12,000−3PWidgets+P−M+2A

In the demand function, P is the price of good Y, M is the income of consumers in the area, and A is the amount of money XYZ Inc. spends advertising Widgets.

What is the point price elasticity of demand for widgets (in absolute value) if the price of good Y is $100 per unit, XYZ Inc. spends $750 on advertising, consumer income is $10,000 and the price of a widget is $200?

1/5

1

3

1/2

QWidgets=12,000−3PWidgets+P−M+2A

In the demand function, P is the price of good Y, M is the income of consumers in the area, and A is the amount of money XYZ Inc. spends advertising Widgets.

What is the point price elasticity of demand for widgets (in absolute value) if the price of good Y is $100 per unit, XYZ Inc. spends $750 on advertising, consumer income is $10,000 and the price of a widget is $200?

1/5

1

3

1/2

answer

1/5

question

Suppose that XYZ Inc. has total costs that can be expressed as:

TC(Q)=10,000+2Q−3Q2+4Q3

If XYZ Inc. produces 10 units of output, what are the firm's average variable costs?

$13,720

$372

$1,372

$3,720

TC(Q)=10,000+2Q−3Q2+4Q3

If XYZ Inc. produces 10 units of output, what are the firm's average variable costs?

$13,720

$372

$1,372

$3,720

answer

$372 use derivatives

question

uppose that XYZ Inc. sells widgets and faces a demand function of:

Qd=125−12P

The firm also has a constant MC = ATC of $20 per unit. XYZ Inc. can maximize total revenue by setting a price of $

______per widget. (In the space above, provide a number representing the price at which XYZ Inc. maximizes total revenue, precise to two decimals. Ex: 8.78. Do not include any intermediate calculations.)

Qd=125−12P

The firm also has a constant MC = ATC of $20 per unit. XYZ Inc. can maximize total revenue by setting a price of $

______per widget. (In the space above, provide a number representing the price at which XYZ Inc. maximizes total revenue, precise to two decimals. Ex: 8.78. Do not include any intermediate calculations.)

answer

125

question

Suppose that the market for corn in Atlantis, a small closed economy, can be described by the following demand and supply equations where P is the price per unit of corn and Q is units of corn:

Demand: Q = 10,000 - 100P

Supply: Q = 100P - 2,000

If the government of Atlantis decides to implement a price support program in this market, which of the following statements is false (holding everything else constant)?

To be effective this price support program must implement a price floor that is greater than $60 per unit of corn.

If the price floor implemented is $80 per unit of corn, then the government will need to spend $80,000 to purchase all of the excess supply at that price.

If the price floor implemented is $80 per unit of corn, then consumer expenditure on corn will be equal to $160,000.

All of the above are true

Demand: Q = 10,000 - 100P

Supply: Q = 100P - 2,000

If the government of Atlantis decides to implement a price support program in this market, which of the following statements is false (holding everything else constant)?

To be effective this price support program must implement a price floor that is greater than $60 per unit of corn.

If the price floor implemented is $80 per unit of corn, then the government will need to spend $80,000 to purchase all of the excess supply at that price.

If the price floor implemented is $80 per unit of corn, then consumer expenditure on corn will be equal to $160,000.

All of the above are true

answer

If the price floor implemented is $80 per unit of corn, then the government will need to spend $80,000 to purchase all of the excess supply at that price.

question

Deirdre's Soap Company is a small firm in a perfectly competitive market. Deirdra has a total cost curve for producing Q bars of soap given by the equation

TC(q)=2+q+12q2

Her marginal cost is given by:

MC(q)=1+q

If the market price is $4 per bar of soap, what will be Deirdre's profit?

$2.50

$12.00

$4.00

$9.50

TC(q)=2+q+12q2

Her marginal cost is given by:

MC(q)=1+q

If the market price is $4 per bar of soap, what will be Deirdre's profit?

$2.50

$12.00

$4.00

$9.50

answer

$2.50

question

If the price of a bushel of sugar beets falls from $10.50 to $9.50, and that price drop causes the quantity of bushels demanded to increase from 188 to 212 bushels, then this means the price elasticity of demand for sugar beets is (use the arc elasticity formula)

0.8

1.0

1.2

8.0

0.8

1.0

1.2

8.0

answer

1.2

question

Suppose there are only two companies in the whole world that manufacture and sell hoverboards: ABC Corp and XYZ Inc. Both companies have similar technology that allows them to make hoverboards for $20 each. Neither firm has any fixed costs. The worldwide demand for hoverboards is pretty low now that they are known to catch fire. It can be expressed by the inverse demand function below:

P(Q)=200−Q

Suppose that ABC Corp. and XYZ Inc. are able to form a cartel. How many hoverboards will each firm produce when they collude to maximize profits?

ABC Corp will produce 45 Hoverboards and XYZ Inc. will produce 45 Hoverboards

ABC Corp will produce 45 Hoverboards and XYZ Inc. will produce 60 Hoverboards

ABC Corp will produce 60 Hoverboards and XYZ Inc. will produce 45 Hoverboards

ABC Corp will produce 60 Hoverboards and XYZ Inc. will produce 60 Hoverboards

P(Q)=200−Q

Suppose that ABC Corp. and XYZ Inc. are able to form a cartel. How many hoverboards will each firm produce when they collude to maximize profits?

ABC Corp will produce 45 Hoverboards and XYZ Inc. will produce 45 Hoverboards

ABC Corp will produce 45 Hoverboards and XYZ Inc. will produce 60 Hoverboards

ABC Corp will produce 60 Hoverboards and XYZ Inc. will produce 45 Hoverboards

ABC Corp will produce 60 Hoverboards and XYZ Inc. will produce 60 Hoverboards

answer

ABC Corp will produce 45 Hoverboards and XYZ Inc. will produce 45 Hoverboards

question

Suppose there are only two companies in the whole world that manufacture and sell hoverboards: ABC Corp and XYZ Inc. Both companies have similar technology that allows them to make hoverboards for $20 each. Neither firm has any fixed costs. The worldwide demand for hoverboards is pretty low now that they are known to catch fire. It can be expressed by the inverse demand function below:

P(Q)=200−Q

Suppose that ABC Corp. and XYZ Inc. are able to form a cartel. If they split the market evenly and each produce the profit maximizing quantity of hoverboards, how much more profit will each firm make when colluding to sell hoverboards as compared to the Cournot-Nash equilibrium where they compete on quantity?

$450

$900

$1,800

$3,600

P(Q)=200−Q

Suppose that ABC Corp. and XYZ Inc. are able to form a cartel. If they split the market evenly and each produce the profit maximizing quantity of hoverboards, how much more profit will each firm make when colluding to sell hoverboards as compared to the Cournot-Nash equilibrium where they compete on quantity?

$450

$900

$1,800

$3,600

answer

$450

question

Labor (L) Capital (K) Output (Q)

0 10 0

1 10 15

3 10 25

4 10 30

6 10 32

Given the short-run production function described by the table above, what is the marginal product of labor associated with hiring the fifth worker?

5 units of output

10 units of output

2 units of output

1 unit of output

0 10 0

1 10 15

3 10 25

4 10 30

6 10 32

Given the short-run production function described by the table above, what is the marginal product of labor associated with hiring the fifth worker?

5 units of output

10 units of output

2 units of output

1 unit of output

answer

1 unit of output

question

XYZ Inc. has a monopoly in the widget market in Vermillion, SD. The market demand curve for widgets in Vermillion is:

Qd=100−P

and XYZ Inc. has total costs of

TC(q)=25+60q+q2

and marginal costs of

MC(q)=60+2q

If XYZ Inc. acts as a monopolist, what level of profits will the firm earn. Enter the number below.

_____(Do not show any work, do not include a dollar sign. The number should be precise to two decimals. If you include anything other than a number in the format "xxx.xx" representing the amount of profits XYZ Inc. will earn in this market, you will not receive credit for this problem)

Qd=100−P

and XYZ Inc. has total costs of

TC(q)=25+60q+q2

and marginal costs of

MC(q)=60+2q

If XYZ Inc. acts as a monopolist, what level of profits will the firm earn. Enter the number below.

_____(Do not show any work, do not include a dollar sign. The number should be precise to two decimals. If you include anything other than a number in the format "xxx.xx" representing the amount of profits XYZ Inc. will earn in this market, you will not receive credit for this problem)

answer

175

question

Suppose a supplier has an agreement with a firm to be paid $3,500 in 2 years. If the annual interest rate is 4 percent, the supplier would be indifferent between receiving ________ now and waiting 2 years to receive the $3,500.

answer

$3,235.95

question

Suppose that GNV Pool owns the only community pool in Gainesville, FL. The market demand for annual passes to this pool is Q = 600 - 2P where Q is the quantity of annual passes demanded and P is the per-pass price. GNV Pool knows that it has a total cost of providing annual passes equal to

TC(q)=25,000+(1/4)q^2

What is the price per pass at GNV pool's profit-maximizing quantity?

TC(q)=25,000+(1/4)q^2

What is the price per pass at GNV pool's profit-maximizing quantity?

answer

200

question

If a monopolistically competitive firm is producing 9,000 units of output and at this output level, the price is $10 and the average total cost is $10, the firm profit/loss is equal to ________ and it ________ possible for the firm to be in long-run equilibrium.

answer

$0; is

question

At the profit−maximizing quantity, the price elasticity of demand is 2.5. What is the markup?

A.

2.57

B.

1.67

C.

0.71

D.

1.32

A.

2.57

B.

1.67

C.

0.71

D.

1.32

answer

1.67

question

Suppose there are only two companies in the whole world that manufacture and sell hoverboards: ABC Corp and XYZ Inc. Both companies have similar technology that allows them to make hoverboards for $20 each. Neither firm has any fixed costs. The worldwide demand for hoverboards is pretty low now that they are known to catch fire. It can be expressed by the inverse demand function below:

P(Q)=200−Q

If XYZ Inc. has announced that it will produce 100 hoverboards, what is the best response (production level) for ABC Corp?

0 Hoverboards

20 Hoverboards

40 Hoverboards

90 Hoverboards

P(Q)=200−Q

If XYZ Inc. has announced that it will produce 100 hoverboards, what is the best response (production level) for ABC Corp?

0 Hoverboards

20 Hoverboards

40 Hoverboards

90 Hoverboards

answer

40 Hoverboards