1、Managerial EconomicsPart 1:1. The price of good A goes up. As a result the demand for good B shifts to the left. From this we can infer that:a.good A is a normal good.b.good B is an inferior good.c.goods A and B are substitutes.d.goods A and B are complements.e.none of the above.Choose: d) the defin
2、ition os complements2. Joes budget line is 15F + 45C = 900. When Joe chooses his most preferred market basket, he buys 10 units of C. therefore, he also buys : a. 10 units of F b. 30 units of F c. 50 units of F d. 60 units of F e. None of the aboveChoose: b) We assume that Joe will spend all his inc
3、ome. If C = 10, then 15F =900 45(10) =450, so F = 450/15 =30.3. Kim only buys coffee and compact discs. Coffee costs $0.60 per cup, and CDs cost $12.00 each. She has $18 per week to spend on these two goods. If Kim is maximizing her utility, her marginal rate of substitution of coffee for CDs is: a.
4、 0.05 b. 20 c. 18 d. 1.50 e. None of the aboveChoose: a) At Kims most preferred market basket, her MRS equals the price ratio (Pcoffee/PCD), which equals 0.6/12 or 0.05.4. The bandwagon effect corresponds best to which of the following?a.snob effect.b.external economy.c.negative network externality.
5、d.positive network externality.Choose: d)5. A Giffen gooda.is always the same as an inferior good.b.is the special subset of inferior goods in which the substitution effect dominates the income effect.c.is the special subset of inferior goods in which the income effect dominates the substitution eff
6、ect.d.must have a downward sloping demand curve.Choose: c) the definition of Giffen good6. An Engel curve for a good has a positive slope if the good is :a. an inferior good. b. a Giffen good.c. a normal good. d. a, b, and c are true.e. None of the above is true.Choose: c) Inferior and Giffen goods
7、have negatively sloped Engel curves.7. The price of beef and quantity of beef traded are P* and Q*, respectively. Given this information, consumer surplus is the area:a. 0BCQ* b. ABC c. ACP* d. CBP* e. 0ACQ*Choose: d) Consumer surplus is the area between the demand line and the price.8. In Figure 1,
8、 holding income constant, what change must have occurred to rotate the budget line from the old line(1) to the new line(2)? (1)(2)PizzaCokeFigure 1a. The price of Coke fellb. The price of pizza fellc. The price of pizza rosed. The price of Coke went upe. b and cChoose: b) The horizontal intercept, I
9、/PC, is unchanged, which implies that PC could not have changed (holding income constant). Since the slope is PP/PC, the slope change means that the price of pizza must have fallen. This can also be seen intuitively from Figure 1, since the consumer can now buy more pizza than before if he spends al
10、l his income on pizza.9. Andy buys 10 pounds of onions per month when the price is $0.75 per pound. If the price falls to $0.50 per pound, he buys 30 pounds of onions. What is his arc elasticity of demand over this price range?a. - 1.33 b.2 c.2.5 d. - 6 e. None of the above is correct.Choose: c) Usi
11、ng the arc elasticity formula,The next two questions refer to the following information: Opie and Gomer are the only two consumers in the video cassette rental market in the Mayberry. Their demand curves per week are pictured in Figure 2.10. If rentals cost $2.50 each, the total quantity demanded ea
12、ch week in the market is :a. 3 b. 6 c. 15 d. 10 e. None of the above is correct.Choose: b) Add horizontally to get the market demand curve. At P = $2.50, QO = 3 and QG = 3 for a total of 6 units demanded.11. For a decrease in price from $2.50 to $1.50, market demand is :a. elastic. b. unit elastic.
13、c. inelastic. d. perfectly inelastic. e. More information is needed.Choose: a) Demand is price elastic:EP = %Q/%P = (15-6)/6/(2.50-1.50)/2.50 = -3.75OPIE2.501.50 3 8Quantity(number of cassettes)DoPrice($/unit) (a)Price($/unit)2.501.50 3 7Quantity (number of cassettes)COMERDG(b) Figure 212. As presid
14、ent and CEO of MegaWorld industries, you must decide on some very risky alternative investments:ProjectProfit if SuccessfulProbability of SuccessLoss if FailureProbability of FailureA$10 million.5-$6 million.5B$50 million.2-$4 million.8C$90 million.1-$10 million.9D$20 million.8-$50 million.2E$15 million.4$0.6The highest expected return belongs to investmenta. A. b. B. c. C. d. D. e. EChoose: b) Ea=2 Eb=6.8 Ec=0 Ed=6 Ee=613.An individual with a constant marginal ut
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