Final_BA_315_Winter_05

# Final_BA_315_Winter_05 - Final Exam Winter 2005 BA 315...

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2 Part C: Marginal Benefit and Marginal Cost (15 points) 1.[20 points] A radio manufacturer is experiencing theft problems at its warehouse and has decided to hire security guards to reduce the thefts. The firm wants to minimize the net cost of warehouse thefts. Number of Security Guards Number of Radios Stolen Per Week Cost of stolen Radios Reduction in Cost, i.e., MB or MRP MC, or Wage 0 25 25x\$40=\$100 0 - 0 1 15 15x\$40=\$600 \$1000-600=\$400 \$130 2 10 10x\$40=\$400 \$600-400=\$200 \$130 3 6 6x\$40=\$240 \$400-240= \$160 \$130 4 4 4x\$40=\$160 \$240-160=\$80 \$130 5 3 3x\$40=\$120 \$160-120=\$40 \$130 a.[10 points] If each security guard is paid \$130 a week and the cost of a stolen radio is \$40, how many security guards should the firm hire? (Show calculations in table) Rule:___hire three Guards based on ,, MRP W or MB MC ≥≥ _____________ b.[10 points] If the cost of a stolen radio is \$40, what is the MOST the firm would be willing to pay to hire the first security guard? Why? (Show your reasoning) Calculations:__First guard provides \$400 MRP or MB, therefore we should be willing to pay up to \$400. Part D: Macroeconomic and Competitive Position (10 points) 1.[5 points] Suppose the economy in your country is near full employment. Briefly explain how fiscal policies can inversely affect your competitive position compared to your rivals in another country?
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Final_BA_315_Winter_05 - Final Exam Winter 2005 BA 315...

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