Managerial Economics – ECP 3703
Eastern Florida State College – Palm Bay
Individual Problems Answer Key
4-1 Extent Versus Discrete Problems
Identify which of the following are extent decisions.
a. Decide whether to expand an existing product into a new region.
b. What discount should be given on products during the upcoming holiday sale?
c. Should the advertising budget be changed for the upcoming year?
d. Should you develop a new product for an existing product line?
4-2 Game Day Shuttle Service
You run a game day shuttle service for parking services for the local ball club. Your costs for different
customer loads are 1: $30, 2: $32, 3: $35, 4: $38, 5: $42, 6: $48, 7: $57, and 8: $68. What are your
marginal costs for each customer load level? If you are compensated $10 per ride, what customer load
would you want?
4-3 Paid for Grades
Children in poor neighborhoods have bleak outlooks on life and do not see much gain to studying. A
recent experiment is paying children in poor neighborhoods $100 for each
they earn in a six-week
grade reporting cycle. How does this affect behavior?