What is Andia's opportunity cost of producing one pound of beef? 3/5 bushels of wheat
What is Andia's opportunity cost of producing one bushel of wheat? 5/3 pounds of beef
What is Zardia's opportunity cost of producing one bushel of wheat? 3/2 pounds of b
The Production Process and
I. Production Analysis
II. Cost Analysis
Total Cost, Variable Cost, Fixed Costs
- A function that defi
Elasticity and Its
Cheap TVs, etc
Gas prices: down 1%
TVs: down 13.9%
Medical care: up 2.5%
College textbooks: up 5.7%
Elasticity . . .
is a measure of how much buyers and
sellers respond to changes in market
ILLINOIS STATE UNIVERSITY
DEPARTMENT OF ECONOMICS
Econ 239: Managerial Economics
Summer Semester 2017
Dr. Susan Chen
E-mail: [email protected]
The science of economics provides some powerful conceptual tools that enable us to a
The Economics of Effective
The objective (goal) and the constraints.
-Managerial economics is the study of how to
direct scarce resources in the way that most
Market Forces: Demand and
I. Market Demand Curve
The Law of Demand
II. Market Supply Curve
The Law of Supply
III. Market Equilibrium
IV. Price Restrictions
Examples on Income
Ground beef, nonfed
What does each income elasticity imply?
Transportation is a normal good, a luxury good. Expenditures on
transportation rise (decline) 1.8% for
Qx = 1200 3Px 0.1Pz
Qx = 1200 3(140) 0.1(300)
Qx = 1200 420 3
Qx = 780 3
Qx = 777
EQ,P = ax(Px/Qx)
EQ,P = -3(140/777)
EQ,P = -3(0.18)
EQ,P = -0.54
Demand is inelastic at this price. If the firm were to decrease prices, tota
1. A. Neither player has a dominant strategy in this game.
C. The Nash Equilibrium is at (B,E).
B. Each player has a dominant strategy w
1. (a) D2 is relevant when rivals match price, because demand is more inelastic.
(b) D1 is relevant when rivals do not match price, because demand is more elastic.
(c) (1) $20
(2) 0 units.
2. (a) MC1 = 26; MC2 = 32; a = 200; b = 3
Q1 = (a-c1)/2
1. a. Under standard pricing, MR = MC. So, Q = 4. The price on the demand curve corresponding to
4 is $60. Profit = (P-MC)xQ = (60-20)x4 = 160. Q = 4; P = 60; profit = 160.
b. Under first-degree price discrimination, a firm produces where the