Dr. David J. St. Clair Managerial Economics
Economics 3551 Spring 2008
Course Syllabus Special Note#1: This is a hybrid online course. All instruction is done online. Exams are done in the classroom. Your attendance in class will be required on at
Econ 3551 Online Sp-08 First Assignment Questions 1. One of my in-laws (who shall remain nameless) always plays the Lotto because he figures that the odds of winning are about 50%. He reasons that you either win or you loose. Therefore, there are two
Price discrimination occurs when the same
product is sold at more than one price. It is
common and legal.
For example, a firm may sell boxes of candy as
2 May 2013
Assignment: Chapter 2
A. 9Lives may look like any regular phone case, but what consumers do not realize is that it holds a
battery charge in order to give life to a dying phone. For instances where an ordinary ch
California State University, East Bay
Department of Economics
Managerial Economics and Business Strategy ECON 3551
Assignment # 2
Question 1 (Optimal Procurement of Inputs)
According to BusinessWeek Online, worldwide spending on IT services and
Here are the two problems that required more algebra:
Xenophobic Car Palace (XCP) purchases late-model domestic automobiles at wholesale
auctions and sells them in Charleston and Savannah. XCPs total cost is given by
TC =100(QC + QS) + (QC + QS
Managerial Use of Price Discrimination
What is Price Discrimination?
Consider the following demand facing a monopolist or monopolistically competitive firm:
What is the monopoly price?
What is the consumer surplus at that price?
1. If a representative firm, with long-run total cost given by TC = 50 + 2q + 2q2,
operates in a competitive industry, where the market demand is given by QD =
1,410 40P, how many firms will exist in this market in the long-run
2. The long-ru
This brief note shows the relationship between marginal revenue (MR), price elasticity of
demand (), and the price for both a linear and a non-linear demand function:
Suppose you have a linear demand function as follows:
To get the revenue
Monopoly and Monopolistic Competition
What is a monopoly?
Demand facing a monopolist:
Once we have the equations for demand we can begin to analyze the price and quantity
determination by a monopolist.
What is perfect competition?
Price and Quantity Determination in Perfect Competition
Once we have the equations for demand and supply, we can find out what the equilibrium price
and quantity are for a perfectly
The Analysis of Costs
Short-Run Cost Functions
Costs are closely related to output and production. They are two sides of the same coin. It is
important to see the relationship between the two concepts in economics. Consider the fol
The Production Function
What is the relationship between input and output?
Lets write the relationship in a very general form as follows:
Q = f(X1 , X2) = f(Labor , Capital)
What would such a production technology
What is Managerial Economics? A discipline that provides a guide to making sound
How is that accomplished? Use formal models to analyze the effects of managerial
decisions on measures of a firms
The Concept of Demand
Last time we briefly discussed the demand curve. Specifically, we made a distinction between
the effect of a price change on the demand curve and reviewed the factors that shift the demand
curve. This chapter
0 out of 10 points
Suppose a perfectly competitive market conditions are characterized by the following
inverse demand and inverse supply functions: P = 100 - 5Q and P = 10 + 5Q. Then, the
demand curve facing an individual firm operating in th
0 out of 10 points
Which of the following is true under monopolistic competition in the short run?
P = MR.
P > MC.
Response Feedback: incorrect
0 out of 10 points
A producer of fixed proporti
10 out of 10 points
A slight increase in the marginal cost of a firm definitely leads to a reduction in its
output if the firm competes in the:
Cournot fashion and Bertrand fashion.
Cournot fashion and B
Consumer Behavior and
If managers understand how consumers make choices,
they are in a better position to influence those choices
via marketing, pricing and distribution s
Monopolists are price makers
The extreme case of market power is monopoly: there is
only one dominant supplier in the market
How does a manager who has market power
Managers must choose the optimal combination
of inputs (capital and labor) to minimize
production costs for a given level of outputs
The production function specifies the re
Analysis of Costs
Analysis of costs
How are costs related to output?
Understanding costs is needed for decisions
about pricing, output, transfer pricing, cost
control, and future production planning
Managers make decisions
Managerial economics uses formal
models to analyze managerial actions and
their effect on firm performance
Enables analysis of cost, demand,
Using Mathematical Tools
Y is a function of X
Y is the dependent variable, and X is the independent
Mathematicians graph the dependent variable (typically
denoted as Y) on th
Elasticity Work Sheet Econ 3551
1. Write a clear and precise definition or description for each of the following terms:
price elasticity of demand
perfectly elastic demand
perfectly inelastic demand
Economics 3551 Syllabus, Fall 2014
Economics 3551-01 Fall 2014 Mon/Wed 2-3:50PM AE-386
Office: VBT 348
Office hours: Monday/Wednesday 1:00-2:00PM. Feel free to stop by or email me.
Consumer Behavior Worksheet
1. What is the utility maximizing rule (also called the bang for the buck rule)?
State it using words, and write an equation for it in terms of the marginal utilities
and prices for goods X and Y. What do we assume about the us
Costs Analysis Worksheet
1. Two managers run similar plants with a normal output of 100 units per year. Plant A
has annual fixed cost of $1000 and variable cost of $10 per unit. Plant B has annual fixed
cost of $500 and variable cost of $15 per