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(ECON214)[2009](s)final~752^_10238 - Econ214 Managerial...

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1 Econ214 Managerial Microeconomics Spring, 2009 Final Exam Instructor: Yan YU HKUST Name: _______________ ID number:_______________ Total Score: _________________ General Instruction: This is a closed-book examination. You have 180 minutes. Please check first if you have a total of 8 pages including this cover page. You may use calculators.
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2 I. Multiple Choice; (only one correct answer for each question. 5 points each, 25 points total) 1. (9.1) You are the manager of a gas station and your goal is to maximize profits. Based on your past experience, the elasticity of demand by Texans for a car wash is -4, while the elasticity of demand by non-Texans for a car wash is -6. If you charge Texans $20 for a car wash, how much should you charge a man with Oklahoma license plates for a car wash? A. $1.50 B. $15.00 C. $18.00 D. $20.00 2. (9.3, 2.4) A local video store estimates their average customer's demand per year is Q = 7 - 2P, and knows the marginal cost of each rental is $0.5. How much should the store charge for an annual membership in order to extract the entire consumer surplus via an optimal two-part tariffs strategy? 3. (8.5) Management and a labor union are bargaining over how much of a $50 surplus to give to the union. The $50 is divisible up to one cent. The players have one-shot to reach an agreement. Management has the ability to announce what it wants first, and then the labor union can accept or reject the offer. Both players get zero if the total amounts asked for exceed $50. Otherwise, each gets what it requested. Which of the following is not a Nash equilibrium?
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