407ex3samplesp09

407ex3samplesp09 - MGMT 407 Spring 2009 MIDTERM 3 Sample...

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MGMT 407 Spring 2009 MIDTERM 3 Sample NAME_______________________ This is an open-book and open-notes examination. Full credit will be given only when the entire solution process and calculations are shown. Assume prior results are correct in multipart questions. 1. (80 points and 40 minutes) Suppose you operate in a competitive industry where the 2 typical firm faces a total cost function, TC = 320 - 7 Q + 20 Q . (10) a. What quantity will you produce? (5) b. What will be the price of your product? (10) c. Below what price will you no longer produce? Suppose now that all your competitors disappear and you become a monopolist facing a demand function where P = 497 - 8 Q. Now also suppose you cannot change quantity in the short run. Use the LEFT board diagram. (10) d. What price will clear the market? (5) e. What is the price elasticity of demand at this point? (5) f. Modify the diagram and label the corners of consumers’ surplus [a,b,c,d]. (5)
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This note was uploaded on 10/25/2011 for the course MGMT 407 taught by Professor Staff during the Spring '11 term at S.F. State.

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