04 Jun Question Managerial Economics Questions for F
Question
Managerial Economics Questions for Final Exam 2013 (summer) CHAPTER 5 -10
1. The following table shows data for a simple production function.
Capital costs this firm $ 15 per unit, and labor costs $9 per worker.
K
L
(Capital) (Labor) TP
20
0
20
20
20
20
20
20
20
20
20
1
2
3
4
5
6
7
8
9
0 TFC
5
15
30
50
75
85
90
92
92
TVC
TC
AFC
AVC
ATC
MC
a. From the information on the table, calculate total fixed cost (TFC), total variable cost (TVC),
total cost (TC), average fixed cost (AFC), average variable cost (AVC), average total cost (ATC),
and marginal cost (MC).
b. At what point is average total cost minimized? At what point is average variable cost
minimized?
2. A monopolist sells in two geographically divided markets, the east and the West. Marginal cost
is constant at $100 in both markets. Demands and marginal revenue in each market are as
follows:
Qe= 1000-2Pe
MRe= 450 Qe
Qw= 700-Pw
MRw= 700- 2Qw
a. Find the profit maximizing price and quantity in each market.
b. In which market is demand more elastic?
c. If the marginal cost goes up in west to $110, how will Pw and Qw will change in west?
3. Using the graph below calculate the profit:
a. If the firm is making economic profit what will be the price and the quantity?
b. If the firm is making zero economic profit, what will be the price and the quantity?
c. If the firm is making negative economic profit, what will be the price and the quantity?
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