Lecture 3 Problems and Solutions
Q1 - Demand Analysis. The demand for housing is often described as being highly cyclical and very sensitive to
housing prices and interest rates. Given these characteristics, describe the effect of each of the
NATURE AND SCOPE OF MANAGERIAL ECONOMICS
QUESTIONS & ANSWERS
Is it appropriate to view firms primarily as economic entities?
Yes. Firms represent a combination of people, physical assets, and information
(financial, technical, m
Solutions to midterm
Managerial Economics - Refers to the use of economic theory (micro and macro) and the tools of analysis
of decision science (mathematical economics and econometrics) to examine how an organization can
achieve its aims and objective
= 0.60 (2.5L0.601 C0.40)
= 1.50L0.40 C0.40
= (2.5L0.60 C0.40) / L
= 2.5L0.40 C0.40
(d) If the amount of labour is INCREASED by 1%, then output will INCREASE by 0.60%.
(e) This production function is of the Cobb-Douglas form and the sum
Lecture 2 In-class Problems and Solutions.
Profit Maximization: Equations. Rochester Instruments, Inc., operates in the highly competitive electronics industry. Prices for its RII - X
control switches are stable at $50 each. This means that P = MR = $50 i