Key_to_Mid-Term_Exam_Study_Guide_Questions

# Key_to_Mid-Term_Exam_Study_Guide_Questions - Key to...

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Key to Mid-Term Exam Study Guide Questions 1. a) MC = 5 + 0.001Q b) P = \$35 c) Q = 5,000 d) π = \$37,500 2. a) Q = 700 b) P = \$830 c) π = \$209,000 3. a) Q = 8,000 b) π = \$50,000 4. a) Q 1 = 13,000 Q 2 = 3,000 Since the company wants to provide as much patient care as possible, the optimal quantity is 13,000. 5. a) Q = 1,000 MC = \$1,700 AC = \$1,700 P = \$2,500 π = \$800,000 6. a) Q = 2,000 P = \$4,300 π = \$1,600,000 7. a) Q =520,000 P = \$65 TR = \$33,800,000 8. a) Q = 50,000 – 5,000P P = 10 -0.0002Q b) Q = 25,000 c) ε P = -4

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d) Since the absolute value of the elasticity (=-4) is more than 1, a price reduction would increase the total revenue. 9. a) Q = -20,000,000 + 400,000P b) Q = 0 c) P = \$75 10. a) MC = \$75 b) Q = 1,000,000 11. a) Q D = 40,000,000 – 1,200,000P Q S = -5,000,000 + 2,400,000P b) Q D = 34,000,000 Q S = 7,000,000 Shortage, because Q D > Q S . Shortage = Q D - Q S = 34,000,000 – 7,000,000 = 27,000,000 c) P = \$12.50 d) P = \$20.83 12. P \$25 A \$5 B C Demand 0 Q 4 Consumer Surplus = ABC = ½(Base)(Altitude) = ½(4)(\$25 - \$5) = \$40

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## This note was uploaded on 05/09/2011 for the course ECON 528 taught by Professor Adhikari during the Spring '11 term at University of Louisiana at Lafayette.

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Key_to_Mid-Term_Exam_Study_Guide_Questions - Key to...

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