Ch 1 - Managerial Economics 6005 Homework # 1 Chapter: 1...

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Managerial Economics – 6005 Homework # 1 Chapter: 1 Q1.3 Describe the effect of each of the following managerial decisions or economic influences on the value of the firm: A. The firm is required to install new equipment to reduce air pollution. If the firm is required to install new equipment to reduce air pollution, then the total cost will be increased, and the total profit will be affected. Thus, the value of the firm will increase. B. Through heavy expenditures on advertising, the firm’s marketing department increases sales substantially. ……. C. The production department purchases new equipment that lowers manufacturing cost. If the production department purchases new equipment that lowers manufacturing cost, then the total cost will decrease, so the profit will increase and the value of the firm will be sustained. D. The firm raises prices. Quantity demanded in the short run is unaffected, but in the long run, unit sales are expected to decline. ……… E. The Federal Reserve System takes actions that lower interest rates
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Ch 1 - Managerial Economics 6005 Homework # 1 Chapter: 1...

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