Managerial Economics
14-774
Fall 2012 mini 1
Section A1 MW 10:00 11:50 AM INI DEC
FRIDAY 11:00 TO 12:50 pm INI DEC
Text Microeconomics and behavior 8th edition, Robert H. Frank
David L. Lamont
Tepper 306 - Old part of the building
mg00@andrew.cmu.edu
412-

Chapter 11 - Perfect Competition
Answers to Chapter 11 Problems
2) Setting price P = 10 equal to marginal cost of SMC = 2 + 4Q, solve for quantity 10 = 2 +
4Q or 8 = 4Q or Q = 2. The fixed cost that leads to zero economic profit is calculated by
solving =

Chapter 16 - Externalities, Property Rights, and the Coase Theorem
CHAPTER 16
ANSWERS TO QUESTIONS FOR REVIEW
1. The parties involved will contract so that the person with the lowest cost will eliminate the
externality. The cost will be borne by whoever i

Answers to Chapter 4 Problems
1. Sams budget constraint is 2OJ + AJ = 6 or OJ = 3 (1/2)AJ. Sams indifference curves are
straight lines with constant MRS = 1/3. Sams optimal bundle is to consume no apple juice
and three cups of orange juice. When the price

Answers to Chapter 9 Problems
1. The graphs below answer question 1.
b.
a.
Q
Q=8+3L
144
2
Q=16L
Q
20
64
8
16
L
L
4
1
2
3
1. The production function in (1a) has a constant marginal product of labor for all levels of labor input, and the production function

Answers to Chapter 3 Problems
1.
Y($/wk)
100
80
60
40
20
20
40
60
80
Seeds (lbs/wk)
100
3. a) Pecans are equally preferred to macadamias, which are preferred to almonds, which are
preferred to walnuts, so by transitivity it follows that pecans are preferr

Answers to Chapter 2 Problems
1. a) The imposition of the ceiling price on tea causes a reduction in the quantity of tea bought,
from Q1 to Q2 (left panel). The result is a leftward shift in the demand for lemons, resulting
in a reduction in both price an

Answers to Chapter 1 Problems
1. Let $X be the amount Chris earns in a day on his job. The cost to Chris of going to the
park is then $15 (admission fee) + $5 (gas & parking) + $10 (the lost satisfaction from not
working) + $X (lost salary) = $30 + $X. Th

Chapter 13 - Imperfect Competition: A Game Theoretic Approach
Answers to Chapter 13 Problems
6)
A
Not sign
Sign
Not sign
A: "C"
B: "C"
A: Withdraw
B: expel
Sign
A: expel
B: withdraw
A: "F"
B: "F"
B
Suppose both prefer withdrawing to getting a "C," which i