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Managerial Economics Final Exam

This document contains 10 analytical problems related to managerial economics concepts. The problems cover topics like production functions, marginal product, average product, profit maximization, present value, linear trends, and demand equations. They require calculating things like marginal costs, optimal output levels, interest growth, forecasting sales, and present values using algebraic equations and statistical data provided.

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7K views1 page

Managerial Economics Final Exam

This document contains 10 analytical problems related to managerial economics concepts. The problems cover topics like production functions, marginal product, average product, profit maximization, present value, linear trends, and demand equations. They require calculating things like marginal costs, optimal output levels, interest growth, forecasting sales, and present values using algebraic equations and statistical data provided.

Uploaded by

HealthyYOU
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Managerial Economics

Analytical Problems
1. Given the Production Function: Q = 72X + 15X 2 - X3, where Q = Output and X = Input. What is the
Marginal Product (MP) when X = 8?

2. If a production function is given by the equation: Q = 12X + 10X 2 - X3, where Q = Output and X
= Input, calculate the equations for average product.

3. Market price is $50. The firm's marginal cost curve is given by: MC = 10 + 2Q. Find the profit-
maximizing output for the firm.

4. Convenience stores with gas stations tend to sell an essentially identical variety of products and
services. Yet this is generally considered to be a monopolistically competitive industry selling
differentiated products. How can this be considered a differentiated product?

5. You deposit $10,000 in a savings account today. If the interest rate is 3%, what is the value in 20
years?

6. An aircraft company has signed a contract to deliver a plane 3 years from now. The price they
will receive at the end of 3 years is $20 million. If the firm's cost of capital is 6%, what is the
present value of this payment?

7. Qd = 5,000 - 15P + 50A + 3Px - 4I


se = (2, 117) (2.7) (15) (2) (3)

where Qd = Quantity Demanded, P = Good Price, A = Advertising Expenditures, Px = Price of a


Competitive Good, A = Advertising Expenditures, I = Average Monthly Income, and the
Standard Errors of the Regression Coefficients are shown in Parentheses. Calculate the t-
statistics for each variable and explain what inferences can be drawn from them. If R 2 of this
equation is 0.25, what inference can be drawn from it.

8. The Gadget Company believes that sales are growing according to a linear trend, Q = 50,000 +
200t, where t is time, and t=0 in 1990. Forecast sales for 2003.

9. You are given the following straight-line trend equation: Sales = 1,275 + 89.3t, where 1990
represents t = 1. Project sales for 2000.

10. An aircraft company has signed a contract to deliver a plane 3 years from now. The price they
will receive at the end of 3 years is $20 million. If the firm's cost of capital is 6%, what is the
present value of this payment?

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