Mid Term Key

 Mid Term Key Composition

EconS452

15 Problems*30 points each sama dengan 450 factors

Score based on 400 details

Midterm

10/25/2012

Name: ___________________________

1 .

Zelda Manufacturing provides a rather exclusive product that sells for $15 per unit, plus the marginal value is $7. 50. Determine the Lerner index for Zelda Manufacturing. Does this index reveal market electrical power? Using the SCP paradigm, what might the conduct of Zelda suggest about the structure from the industry?

The Lerner index is (P - MC)/P = (15 - six. 5)/15 =. 50. Because the Lerner index is positive, there is evidence of market electric power. The ability to physical exercise Market electricity suggests that Zelda is taking part in a market that is much closer to a monopoly than a correctly competitive market.

2 .

A manager derives satisfaction by income and leisure on the job (shirking).

a. If the director is paid a fixed earnings of $100, 000, how much leisure will certainly he or she take in on the job during an eight-hour day? Describe.

b. If the manager is given a salary of $100, 500 plus 10 % of the firm's profits, she or he chooses to spend six several hours managing and two several hours consuming leisure. Salary and bonus total $120, 1000. Does the administrator necessarily choose this situation towards the situation in part a? a. He will consume the whole 8-10 (8) several hours as leisure time because operating (putting out effort) causes dissatisfaction for the manager. Therefore he will avoid if there is zero punishment pertaining to doing so. b. The manager does prefer this situation for the situation in (a). You will discover two usage bundles right now: (1) hundred buck, 000 wage plus eight (8) several hours of amusement a day, and (2) $120, 000 income plus two (2) several hours of amusement a day. Since the original selection of 8 hours shirking and $100, 1000 is still available, the fact that she made a decision to work 2 hours reveals that she wants the second spend scheme.

EconS452

Midterm

10/25/2012

3.

The total costs to get Morris Companies are described in the following table. Based on this information, fill out the lacking entries inside the table to get fixed cost, variable cost, average fixed cost, average variable cost, average total cost, and marginal price.

4.

The demand function for VCRs has been estimated to get:

Qv = 134-1. 07Pt +46Pm -2. 1Pv -5M,

where Qv is the level of VCRs, Rehabilitation is the selling price of a videocassette, Pm is a price of a movie, Photo voltaic is the cost of a VCR, and M is cash flow. Based on this information, answer the subsequent questions.

a. Are VCRs normal or inferior goods?

b. Are movies substitutes or complements for VCRs?

c. What additional information is required to calculate the price elasticity of demand for VCRs?

a. Considering that the coefficient connected with income is definitely negative, an increase in income leads to a reduction in demand for VCRs. Hence, VCRs will be inferior products. b. Films are alternatives for VCRs, since the pourcentage associated with the cost of a film is great.

c. You see, the values of costs and income are had to calculate the purchase price elasticity of demand for VCRs.

EconS452

Midterm

10/25/2012

a few.

While at money off shoe retail store, a customer asked a attendant, " I realize that the shoes are ‘buy 1, get one free - limit one totally free pair every customer. ' Will you sell off me one pair to get half-price? " The clerk answered, " I cannot do that. " When the client started to leave the store, the clerk hastily offered, " However , My spouse and i am approved to give you a 40 percent discount about any pair in the store. " Assuming the buyer has $200 to spend upon shoes (X) or all the other goods (Y), and that shoes or boots cost $22.99 per couple, answer the next questions:

a. Illustrate the consumer's option set while using " buy one, get one free" deal and with a 40 percent low cost.

b. How come was the forty percent price cut offered only after the customer rejected the " buy one, get one free" deal and started to keep the store?

c. Why was the clerk willing to offer a " buy one, purchase one free" package, but unwilling to sell some shoes intended for half-price?

a. The straight range connecting details A and...


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