Exam 1: The Fundamentals of Managerial Economics

Given the cost function C(Y)= 6Y²,what is the marginal cost?

The optimal amount of studying is determined by comparing:

What is the marginal benefit associated with producing six units of the control variable,Q (identify point D in the table)? Control Variable Total Benefits Total Costs Net Benefits Marginal Benefit Marginal Cost Marginal Net Benefit Q B(Q) C(Q) N(Q) (Q) (Q) MNB(Q) 0 0 0 0 -- -- -- 1 900 100 800 900 100 800 2 1,700 300 C 800 200 600 3 2,400 600 1,800 700 E 400 4 A 1,000 2,000 600 400 200 5 3,500 1,500 2,000 500 500 F 6 3,900 2,100 1,800 D 600 -200 7 4,200 2,800 1,400 300 700 -400 8 4,400 B 800 200 800 -600 9 4,500 4,500 0 100 900 -800 10 4,500 5,500 -1,000 0 1,000 -1000

The value of the firm is the:

If marginal costs exceed marginal benefits,then:

Marginal benefits are the:

Find the annual interest rate that would create a perpetual cash flow stream of $15,000 when the present value of the asset is $100,000.

If a producer offers a price that is in excess of a consumer's valuation of the good,the consumer:

Suppose total benefits and total costs are given by B(Y)= 600Y − 12Y² and C(Y)= 20Y².What level of Y will yield the maximum net benefits?

If the interest rate is 5 percent,what is the present value of $10 received one year from now?

Economics:

The first-order condition for maximizing net benefits is:

To maximize net benefits in the table,it is most appropriate to use: Control Variable Total Benefits Total Costs Net Benefits Marginal Benefit Marginal Cost Marginal Net Benefit Q B(Q) C(Q) N(Q) (Q) (Q) MNB(Q) 0 0 0 0 -- -- -- 1 900 100 800 900 100 800 2 1,700 300 C 800 200 600 3 2,400 600 1,800 700 E 400 4 A 1,000 2,000 600 400 200 5 3,500 1,500 2,000 500 500 F 6 3,900 2,100 1,800 D 600 -200 7 4,200 2,800 1,400 300 700 -400 8 4,400 B 800 200 800 -600 9 4,500 4,500 0 100 900 -800 10 4,500 5,500 -1,000 0 1,000 -1000

Suppose total benefits and total costs are given by B(Y)= 100Y − 8Y² and C(Y)= 10Y².Then marginal benefits are:

Which of the following is (are)true?

You have just been hired as a consultant to help a firm to decide which of three options to take to maximize the value of the firm over the next three years.The following table shows year-end profits for each option.Interest rates are expected to be stable at 8 percent over the next three years. Option Profits in Year 1 Profits in Year 2 Frofits in Year 3 A \ 10,000 \ 80,000 \ 90,000 B \ 50,000 \ 90,000 \ 100,000 C \ 30,000 \ 100,000 \ 115,000 a.Discuss the difference in the profits associated with each option.Provide an example of real-world options that might generate such profit streams. b.Which option has the greatest present value?

Under producer−producer rivalry,individual firms want to sell the product at the maximum price consumers will pay,but they are unable to do this because of:

Suppose total benefits and total costs are given by B(Y)= 600Y − 12Y² and C(Y)= 20Y².What is the maximum level of net benefits?

At what level of output does marginal cost equal marginal revenue? No. Units Produced Total Revenue Total Costs 0 0 0 1 100 50 2 180 110 3 250 180 4 290 270 5 310 380

Which is the correct statement about the relationship between government and the market?