Econ 545 Business Economics Final Exam

ECON 545 Business Economics Final Exam
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Question :
(TCO A) Suppose you are hired to manage a small manufacturing facility that produces Widgets.
(a.) (15 points) You know from data collected on the Widget Market that market demand and market supply have both increased recently. As manager of the facility, what decisions should you make regarding production levels and pricing for your Widget facility?

Remember that supply and demand are about the market supply and market demand, which is bigger than your own company. You are being given data on supply and demand for the whole market and are being asked what effect that has on you as a small part of that market.
(b.) (15 points) Now, suppose that following the supply and demand changes in (a), a substitute good goes up in price, and your costs of production increase. What new decisions will you make regarding production levels and pricing for your Widget facility?

2.
Question :
(TCO B) Here is some data on the demand for marshmallows:
Price Quantity
$10 100
$ 8 300
$ 6 700
$ 4 1300
$ 2 2200
(a.) (15 points) Is demand elastic or inelastic in the $6-$8 price range? How do you know?
(b.) (15 points) If the table represents the demand faced by a monopoly firm, then what is that firm’s marginal revenue as it increases output from 1300 units to 2200 units? Show all work. (Be careful here!)

3.
Question :
(TCO C) You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below.
Total Total
Workers   Labor Cost   Output   Revenue
1   $500   100   $700
2   1000   280   1150
3   1500   440   1440
4   2000   540   1570
5   2500   600   1670
6   3000   630   1710
7   3500   640   1730
(a.) (6 points) What is the marginal product of the second worker?
(b.) (6 points) What is the marginal revenue product of the fourth worker?
(c.) (6 points) What is the marginal cost of the first worker?...