Review Problems ECON 2101 S1 2010 finals

Review Problems ECON 2101 S1 2010 finals - REVIEW PROBLEMS...

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R E V I E W P R O B L E M S Syllabus: Week 5 - Week 12 Please go over all the materials covered in lectures, HWS and tutorials. The review problems are only meant for more practice. For review problems in the last two weeks of Alberto’s part please look at the midterm questions plus review session questions set up by Alberto before the midterm exam. Here are some problems from the materials covered in weeks 7 – 12. Question 1: 10 marks (4, 6) Karicature, a small car company has one plant in Adelaide (A). Let y A denote the number of cars produced in Adelaide. It is deciding whether to open another plant in Brisbane (B). The total costs of production in the two plants are as follows: Adelaide: C(y A ) = (y A ) 2 Brisbane: C(y B ) = 2(y B ) 2 Karicature faces a fixed demand of 30 cars. (a) Suppose there is a set-up cost of $350 for the additional plant in Brisbane. Karicature assumed that the state govt. will bear all of that as it will generate more employment in that state. If the assumption is true how much would Karicature produce in each plant? Find y A and y B . (b) Karicature was told that it has to bear its own set up cost of $350 of opening up the plant in Brisbane. Is it profitable for Karicature to open up the additional plant in Brisbane? Question 2: 10 marks (2, 3, 2, 3)
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Review Problems ECON 2101 S1 2010 finals - REVIEW PROBLEMS...

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