ADVANCED ECONOMIC ANALYSIS
Marco A. Castaneda
Practice Problems 2: Answers
1. Assume you are the manager of a business and are considering lowering the
price of your product. The current price is 25 dollars and you are selling a
quantity of 1500 units per
ADVANCED ECONOMICS ANALYSIS
Marco A. Castaneda
Quiz 2: Answers
1. The demand for the product of a business is given by q = 50 2p. If the price of the
product is p = 10 dollars, the revenue is
a) 100 dollars
b) 200 dollars
c) 300 dollars
d) 500 dollars
REM
ADVANCED ECONOMIC ANALYSIS
Marco A. Castaneda
Practice Problems 1: Answers
1. Assume you have the opportunity to purchase an asset which would generate
25,000 dollars at the end of each year for five years. In addition, assume the
price of the asset is 10
ADVANCED ECONOMICS ANALYSIS
Marco A. Castaneda
Quiz 1: Answers
1. The economic costs differ from accounting costs because of
a) Implicit costs
b) Explicit costs
c) Accounting profit
d) Economic Profit
REMARK: Accounting costs only include explicit payment
Question 1
0 out of 10 points
The economic costs differ from accounting costs because of
Selected
Answer:
Explicit costs
Answers:
Implicit costs
Explicit costs
Accounting
profit
Economic
Profit
Question 2
10 out of 10 points
Which of the following is not
ADVANCED ECONOMICS ANALYSIS
Marco A. Castaneda
Quiz 3: Answers
1. According to the structure-conduct-performance framework, which of the following is
NOT a characteristic of market structure
a) The cost to enter the industry
b) The concentration of the in
Question 1
10 out of 10 points
Specialized investments tend to
Selected
Answer:
Answers:
Increase transaction costs because of costly
bargaining
Decrease transaction costs because of
opportunism
Decrease transaction costs associated with
costly bargainin
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Course ADVANCED ECONOMIC ANALYSIS
T
Advanced Economics Analysis Exam II
PART I
1. A business is more likely to vertically integrate and produce an input internally if
a) Specialized investments are important and the contracting environment is simple
b) Specialized investments are important
ADVANCED ECONOMIC ANALYSIS
Marco A. Castaneda
Practice Problems 3: Answers
1. The following table describes the production function for a business that uses
labor as its only input (the table gives the relationship between the number of
workers and the to
Chapter 9 Quiz
1.
The following diagram illustrates the reaction functions and isoprofit curves for a homogeneousproduct duopoly in which each firm produces at constant marginal cost.
a. If your rival produces 50 units of output, what is your optimal leve
1.
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Southwest Airlines begins a 'Bags Fly Free' campaign, charging no fees for
-2-2
http:/ /ezto.mhedu
a first and second checked bag.
This situation best represents producer-producer rivalry
.
2.
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Chapter 04 - The Theory of Individual Behavior
Chapter 04
The Theory of Individual Behavior
Multiple Choice Questions
1. Suppose the utility function for a firm manager is U = + bQ, where Q is output, is
profit, and b is a positive constant. How would the
1.
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Based on the best available econometric estimates, the market elasticity of demand for your firms
product is -2.5. The marginal cost of producing the product is constant at $175, while average total
cost at cu
1.
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A firm can manufacture a product according to the production function:
Q = F(K,L) = K3/4L1/4.
a. Calculate the average product of labor, APL, when the level of capital is fixed at 81 units and the
firm uses 16
1.
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The graph below illustrates two demand curves for a firm operating in a differentiated product
oligopoly. Initially, the firm charges a price of $60 and produces 10 units of output. One of the
demand curves is
1.
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Use the following, one shot, normal-form game to answer the accompanying questions.
Player 1
Strategy
A
B
C
D
-200, 150
200, -300
-150, 250
Player 2
E
350, 100
400, 400
-250, 550
F
-50, 600
300, 100
750, -350
1.
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The X-Corporation produces a good (called X) that is a normal good. Its competitor, Y-Corp., makes
a substitute good that it markets under the name Y. Good Y is an inferior good.
a. How will the demand for goo
1.
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Ten firms compete in a market to sell product X. The total sales of all firms selling the product are
$2,500,000. Ranking the firms sales from highest to lowest, we find the top four firms sales to be
$415,000
1.
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A consumer has $300 to spend on goods X and Y. The market prices of these two goods are Px =
$15 and Py = $5.
a. What is the market rate of substitution between goods X and Y?
-3
b. In the graph below: 1) Illu
2.
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You did not receive credit for this question in a previous attempt
What is the maximum amount you would pay for an asset that generates an income of $250,000 at
the end of each of five years, if the opportunit
1.
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A potential entrant can produce at the same cost as the monopolist illustrated in the figure below.
The monopolists demand curve is given by DM, and its average cost curve is AC.
a. What level of output does t
Question 1
10 out of 10 points
The demand for the product of a business is given by q = 50 - 2p. If the price of the
product is p = 10 dollars, the revenue is
Selected
Answer:
Answers:
300
dollars
100
dollars
200
dollars
300
dollars
500
dollars
Question
1.
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The graph below summarizes the demand and costs for a firm that operates in a perfectly
competitive market.
Instruction: Use the nearest whole numbers on the graph when calculating numerical responses
below.
a
1.
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Consider the two options in the following table, both of which have random outcomes:
Option 1
Probability of
Outcome
1/16
4/16
6/16
4/16
1/16
Option 2
Possible
Outcomes ($)
150
300
750
300
150
Probability of
O
1.
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You are the manager in a market composed of 4 firms, each of which has a 25.00 percent market
share. In addition, each firm has a strong financial position and is located within a 100-mile radius of
its compet
1.
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Answer the following questions based on the accompanying diagram:
Instructions: All dollar responses should be entered as whole numbers. Include a minus (-) sign for
all negative answers.
a. How much would the
Here are the problems worked out for the textbook chapter 4. If you have questions, please
let me know via email.
1.
a. The market rate of substitution is
P x 15
=
=3 .
Py
5
b. See Figure 4-1.
c. Increasing income to $600 (by $300) expands the budget set,