Bus Econ

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|1. (TCO A) Suppose you are hired to manage a small manufacturing facility that produces Widgets.  | | | |(a.) (15 points) You know from data collected on the Widget Market that market demand and market supply have both increased recently. As | |manager of the facility, what decisions should you make regarding production levels and pricing for your Widget facility? | | | |Remember that supply and demand are about the market supply and market demand, which is bigger than your own company. You are being given | |data on supply and demand for the whole market and are being asked what effect that has on you as a small part of that market. | | | |(b.) (15 points) Now, suppose that following the supply and demand changes in (a), a substitute good goes up in price, and your costs of | |production increase. What new decisions will you make regarding production levels and pricing for your Widget facility? (Points: 30) | | | | | | | |2. (TCO B)   Here is some data on the demand for marshmallows: | | | |Price                Quantity | |$10                  1100 | |$ 8                   1300 | |$ 6                   1700 | |$ 4                   2300 | |$ 2                   3100 | | | |(a.) (15 points) Is demand elastic or inelastic in the $6-$8 price range? How do you know? | | | |(b.) (15 points) If the table represents the demand faced by a monopoly firm, then what is that firm’s marginal revenue as it increases | |output from 1700 units to 2300 units? Show all work. (Be careful here!) (Points: 30) | |3. (TCO C)  You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below.   | |                        Total                            Total | |Workers     Labor...
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