1. a)
First, we must linearize the demand function by taking the natural log of the equation, and add
the time coefficient and error term:
P
b
( A) A+b t time+
ln ( k )+b s Ps +ln
ln ( Q D ) =ln ( a
2) John will charge the following prices:
$16- 70% probability
$18 20% probability
$20 10% probability
i)
EU$16 =
EU$18 =
EU$20 =
Utility Equation 1
U(I) = I^(5/2)
The following represent if Terry cha
2. a)
Price of Fussy:
q F =522 P
2 P=52q F
1
P=26 q F
2
RF =Pq F
1
RF = 26 q F q F
2
1
RF =26 q F q 2
2 F
MR F =26qF
(
)
Opportunity cost: C=10 q F ,
MC=10
MR F =MC
26q F=10
q F =16
1
P=26 q F
2
1
P=2
Managerial Economics (COMM 172)
Prof. Veikko Thiele
PROBLEM SET TOPIC 09 (Oligopoly II)
Two large profit-maximizing firms compete by choosing price. Their estimated demand
functions are given by
30,50
Class 4:
Cost of Production:
Optimal input level q, determined by cost of labor and capital
This function is too simplistic, it ignores other important costs
Expansion path: short run
Capital is fixed
2) John will charge the following prices:
$16- 70% probability
$18 20% probability
$20 10% probability
i)
EU$16 =
EU$18 =
EU$20 =
Utility Equation 1
U(I) = I^(5/2)
The following represent if Terry cha
COMM 172
Olena Ivus
Class 11
Oligopoly II
Class 9 Practice Questions
What happens to an incumbent firms demand curve in
monopolistic competition as new firms enter?
Under a Cournot duopoly, the collus
COMM 172
Olena Ivus
Class 9
Monopolistic Competition. Oligopoly I
Class 8 Practice questions
For a prot-maximizing monopolist, how does the markup of
prices over marginal cost depend on the elasticity
COMM 172
Olena Ivus
Class 20
Incentive Contracts
Class 19 Practice Question
In the insurance market, moral hazard refers to the problem
that high-risk customers have an incentive to give false signals
COMM 172
Olena Ivus
Class 21
Final Review
Outline
1
Exam Structure
2
Exam Policies
3
Practice Questions
4
How to Prepare?
Olena Ivus
Comm172
Exam structure
Date: Monday, April 14
Time: 9:00-12:00pm
Lo
COMM 172
Olena Ivus
Class 17
Decision Making Under Uncertainty I
Class 16 Practice Question
Many industries are often plagued by overcapacity: Firms
simultaneously invest in capacity expansion, so tha
COMM 172
Olena Ivus
Class 16
Strategic Interaction among Firms II
Class 15 Practice Question
Each players payoffs are maximized in a Nash equilibrium.
True or false? Explain.
Olena Ivus
Comm172
The Gu
Professor Olena Ivus
Comm 172 Final Exam Formula Sheet
Own-price elasticity of demand:
D
dQ
P
dQD /QD
=
E =
dP/P
dP
QD
D
The elasticity of demand facing an individual firm:
1 D
D
S
e = E + (1 s)E
Economics Exam Multiple Choice Qs
Class 2 & 3 Market Analysis & Demand Estimation & Forecasting
1. Plastic and steel are substitutes in the production of body panels for certain automobiles. If the
pr
2. a)
Price of Fussy:
q F =522 P
2 P=52q F
1
P=26 q F
2
RF =P q F
1
RF = 26 q F q F
2
1 2
RF =26 q F q F
2
MR F =26qF
(
)
Opportunity cost:
C=10 q F ,
MC=10
C=10 q D ,
MC=10
MR F =MC
26q F=10
q F =16
4. a)
Surplus per unit = $45 - $28 = $17
This is the total surplus from the market transaction.
b)
The highest acceptable price for HCS is $45, and the lowest acceptable price for ST is
$35.
At $45, t
3. Production
dQ
a) MP K =
dK
2
MP K =L
dQ
dL
MP L=2 LK
MP L=
b) No, the production function exhibits increasing marginal returns because MP and
L are positively related in the sense that when L is in
1. Strategic Interaction Among Firms
a) There are none
b) The Nash Equilibrium is for both firms to produce product C because assuming
that the decisions are made simultaneously, firms would be maximi
1. Strategic Interaction Among Firms
a) There are none
b) The Nash Equilibrium is for both firms to produce product C because assuming
that the decisions are made simultaneously, firms would be m
1. The Hold-Up Problem
a) Since the advertising investment is not specific to my relationship with Steve, my
RSI is 0. However, because Steves investment in a bottling machine is specific to my
relati
COMM 172 Notes
Class 1
Trade-Offs
Consumers: have limited incomes, which can be spent on a wide variety of goods and
services, or saved for the future.
Workers: must decide whether and when to ente
Question Two
A) To find new price and quantity, set MR = MC
Find MR
TR = PQ
= (50-5Q)Q
= 50Q 5Q2
MR = 50 10Q
MR=MC
20 = 50 10Q
New Q = 3
New P = 50 5(3) = 35
B) Change in total surplus
Created DWL = 1
QUESTION TWO
A)
Regression Statistics
Multiple R
0.491468698
R Square
0.241541481
Adjusted R Square
0.226372311
Standard Error
90.29795564
Observations
52
Intercept
Pc
Coefficients
2135.576773
Standar
Formula Sheet (Parts I and II)
Price Elasticity of Demand:
Cross-Price Elasticity of Demand:
Advertising Elasticity of Demand:
Annual Growth Rate of Demand:
1
,
Average Product of Labor:
Marginal Prod
Smith School of Business
COMM 172, Sections 001 and 006, Fall Term 2016
Review before Final Exam
Exam coverage: Chapters 10 18 of the textbook, with the exceptions listed below.
PLEASE NOTE:
ALTHOUGH
COMM 172, Sections 001 and 006 Review before Mid-term Exam
(Fall 2016)
Exam coverage: The first 9 chapters of the textbook, with exceptions listed
below
Chapter 2
Sections 2.1, 2.2, and 2.3
Supply an
Class 1: 13/09/16:
Microeconomics: branch of economics that deals w/ the beh. Of individual economic units (consumers, firms, workers,
investors) + markets that these units comprise
Macroeconomics: br
Queens School of Business
Managerial Economics (COMM 172)
Winter 2014
Professor Olena Ivus
MIDTERM EXAM
February 12, 2014
NAME:
STUDENT NUMBER:
Instructions: Please make sure your name and student num
QUEENS UNIVERSITY
QUEENS SCHOOL OF BUSINESS
COMM 172: MANAGERIAL ECONOMICS - SECTION 001-003
FINAL EXAMINATION - APRIL 14, 2014
PROFESSOR OLENA IVUS
STUDENT NUMBER:
Length: 3 hours
Format: Closed book