Course Description This course applies economic concepts to make management decisions. Students employ the concepts of scarce resources and opportunity costs to perform economic analysis. Other topics include supply and demand‚ profit maximization‚ market structure‚ macroeconomic measurement‚ money‚ trade‚ and foreign exchange. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: •
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production process is called a production function. A production function shows the maximum amount of output that we can produce with a given amount of resources. According to the law of diminishing marginal returns‚ as a firm adds more of a variable input to a fixed input beyond some point the marginal productivity of the variable input diminishes. A firm producing goods in the short run employs fixed inputs and variable inputs. Fixed costs are payments to fixed inputs‚ and they do not vary with
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besa44438_ch08.qxd 10/12/04 4:49 PM Page 259 8 C H A P T E R COST CURVES 8.1 LONG-RUN COST CURVES APPLICATION 8.1 The Long Run Cost of Trucking APPLICATION 8.2 The Costs of Higher Education APPLICATION 8.3 Economies of Scale in Refining Alumina? APPLICATION 8.4 Hospitals Are Businesses Too APPLICATION 8.5 Tracking Railroad Costs APPLICATION 8.6 Economies of Scope for the 8.2 S H O RT- R U N C O ST C U RV E S 8.3 SPECIAL TOPICS IN COST Swoosh Experience Reduces Costs of Computer Chips
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1. Economic theory is a valuable tool for business decision making because it Answer identifies for managers the essential information for making a decision. assumes away the problem. creates a realistic‚ complex model of the business firm. provides an easy solution to complex business problems. 0.2 points Question 2 1. Economic profit is Answer the difference between total revenue and the opportunity cost of all of the resources used in production. the
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a slope c. Demand = Marginal Revenue = Average Revenue 6) If a firm is a price taker‚ then the demand curve for the film’s product is: a. Completely horizontal because the price will not change. Use the following graph to answer question 7: 7) Refer to the graph on the left for a firm in pure competition. Line A represents: a. The total revenue made from selling each extra unit of output as per the price at Line B. b. (Additionally‚ Line B is the demand curve‚ marginal revenue curve‚ and average
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efficient market structure? (4 marks) In a perfect competition market price always equals the marginal cost of production and each firm will produce in its average total cost or per-unit cost. This way firms can provide consumer with goods and services at the lowest price. In contrast with other markets structures such as oligopoly and monopolistic competition (both capable of keeping prices above marginal cost)‚ in a perfect competition market firms do not have market power over other firms. c
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___ ___ ___ ___ ___ Marginal revenue ($) ___ ___ ___ ___ ___ ___ Total cost ($) 30 42 50 60 76 100 140 Marginal cost ($) ___ ___ ___ ___ ___ ___ Average cost ($) ¥ ___ ___ ___ ___ ___ ___ FIRM B Quantity 0 1 2 3 4 5 6 Total cost ($) 100 134 154 177 216 266 366 Average cost ($) ¥ ___ ___ ___ ___ ___ ___ Marginal cost ($) ___ ___ ___ ___ ___ ___ Price ($) 140 130 120 110 100 90 80 Marginal revenue ($) ___ ___ ___
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Each of the segments has a different elasticity of demand and subsequently is charged a different price. Arbitrage must be prevented for this type of discrimination to be applicable. Profits are maximized by equating the marginal revenue from the two consumers for the same marginal cost. Indirect price discrimination arises when a seller cannot observe the buyers characteristics‚ and hence cannot determine the optimal price to charge the buyer relevant to their demand elasticity. The seller offers
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percent level of significance? b. Do the results indicate that the average variable cost curve is U-Shaped? How do you know? c. If Argus Corporation produces 8‚000 vacuum cleaners per month‚ what is the estimated average variable cost? Marginal cost? Total variable cost? Total cost? d. Answer part c‚ assuming that Argus produces 10‚000 vacuum cleaners monthly. e. At what level of output will average variable cost be at a minimum? What is minimum average variable cost?
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monopolist’s price is $65 a unit and its marginal cost is $25 for the last unit produced‚ then: A) to maximise profit the firm should decrease output. B) to maximise profit the firm should continue to produce the output level it is producing. C) not enough information is given to conclude what the firm should do to maximise profit. D) to maximise profit the firm should increase output. 2) If a monopolist’s price is $50 at 65 units of output and marginal revenue equals marginal cost and average total cost equals
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