agec 352 hmwrk 2

# agec 352 hmwrk 2 - Homework 2 Due Date 1 In figure 1 above...

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Homework 2 Due Date: January 25, 2010 1) In figure 1 above we mapped the model in words and symbols using an influence  diagram. What addition would we need to make to that diagram when we change  the quantity of pies demanded and sold (Q) from an exogenous to an endogenous  variable? To change the diagram to an endogenous variable we need to extend it to the demand equation we have looked at. 2) In Figure 3 above three graphs are plotted for Revenue, Costs, and Profits. The  plot for profits can be used to find the correct price to charge by finding the  highest point it reaches. How would you find the highest profit using this graph if  it only had revenue and costs plotted? You can look at the graph and see where revenue is the greatest over costs then to check to make sure the graph interpretation was correct you would subtract your predicted cost from your predicted revenue from the graph to see if the price you

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agec 352 hmwrk 2 - Homework 2 Due Date 1 In figure 1 above...

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