Q 2000p 400psuv 100000w 13750s 125000e 1000000i this

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Unformatted text preview: tility vehicles, and so on. 39 Managerial Economics 40 Managerial Economics 10 Examples Table 2: Estimating Industry Supply for New Automobiles Independent variable (1) Parameter Estimate (2) Estimated Value for Independent Variable During the Coming Year (3) Average Price for New Cars (P) ($) 2000 $25,000 50,000,000 Average rice or port tility verage Average Price for Sport Utility Vehicles Vehicles (Psuv) ($) -400 400 $35,000 -14,000,000 14,000,000 -100,000 $85 -8,500,000 Average Cost of Steel, per Ton (S) ($) -13,750 $800 -11,000,000 Average Cost of Energy Input, per mcf Natural Gas (E)(4) The Market Supply Function Industry Industry Versus Firm Supply: A supply function is affected by prices, prices of other products, advertising, and macroeconomic conditions. Firm Firm supply is affected by these factors and competitive influences influences Industry supply is the sum of firm supply (See Table 2) -125,000 $4 -500,000 -1,000,000 8% -8,000,000 Average Hourly Wage Rate, Including Fringe Benefits (W) ($) Average Interest Rate (I) (%) Total Supply (millions of cars) 8,000,000 41 Managerial Economics Estimated Supply (4)=(2)*(3) 42 Managerial Economics Sources Luke M. Froeb and Brian T. McCann, Managerial Managerial Economics: A Problem Solving Approach, 2nd Edition, Thompson-Southwestern. ThompsonPaul G. Keat and Philip K.Y. Young, Managerial Economics 5th Edition Prentice Hall 2006 Economics, 5th Edition, Prentice Hall, 2006. Mark Hirschey, Managerial Economics, 10th Edition, South-Western, 2003. McConnell and Stanley Brue, Microeconomics, 16th edition, 2006. R. Glenn Hubbard and Anthony P. O'Brien, Microeconomics,1st edition 2006. 43 Managerial Economics 11...
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