Managerial Economics 6th Edition Ivan Png - Solutions

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How do people generally deal with risk? What are the types of attitudes toward risk?What attitude do business managers usually exhibit toward business risk? Explain risk aversion, risk and utility of money, expected utility of money, expected monetary return, risk discount, and certainty equivalent.
How is risk measured? Explain the ways of measurement, the technical tools used, and how they work.
What is risk and what is uncertainty? How would each and both affect the managerial decision making and what are the sources of risk?
The following table shows information on two proposed projects. Which project is most likely to win a funding approval?Project A—Initial Investment:20,000 Project B—Initial Investment:20,000 Year Cash Outflow Cash Outflow 1 4,000 8,000 2 16,000 8,000 3 2,000 8,000 4 2,000 8,000
What is CAPM? What is its importance and how does it work?
List and explain the ways by which firms usually finance their investment projects. Explain the rate of returns required by each method of financing. What are the implications of multiple ways of financing for a firm, each with its own rate of return?
What is capital rationing? When should a firm ration its capital and what are the criteria and the process for such rationing?
List, explain, and compare the capital budgeting technical tools by which the proposed investment projects are usually evaluated for acceptance and allocation.
Explain the purpose and basic principle of capital budgeting and how it works to serve the business?
Consider the following information for the production of cookies, produced and packaged in boxes by a small firm:Total overhead cost: $ 1400, Total variable cost: $ 5600, Production size: 1000 units, Price elasticity of demand: − 2.57.
Explain and compare with examples the three degrees of price discrimination.
Explain the pricing strategy for firms producing joint products and give examples of both the case of fixed proportions and the case of variable proportions.
List and explain, as many as you remember, the common pricing practices in the market and recall if you have recently dealt with any of them.
What is the major strategy for firms on multiproduct pricing? How would a firm producing many products ensure its ultimate goal of maximizing profits?
What is the markup? How is it determined and what is the difference between markup on cost and markup on price, and how the price elasticity of demand is relevant?
A competitive firm sells its product for $50.00. If it has the following cost function, what would be its equilibrium output and how much profit can it make?
Make a table to compare the major assumptions and ideas of the four models of oligopoly: Cournot, Stackelberg, Bertrand, and Sweezy.
(a) What is the Lerner index? What is it meant for and howsignificant is it to understand the business market?(b) What is the Hefindahl index? What is it meant for and how significant is it to understand the business market?
Compare the four types of markets–perfect competition, monopoly, monopolistic competition, and oligopoly—in relation to their profit-earning status in the long run.
Explain the circumstances under which a competitive firm would rather shut down.Support your explanation with a graph.
Construct a table to compare the major characteristics of all four types of market structures: perfect competition, monopoly, monopolistic competition, and oligopoly.
Assume that the pdf of total cost (million dollars) for a particular output level has been estimated and is depicted by the histogram shown immediately below. Using the histogram, estimate the probability that the total cost experienced in a future production run for this same level of output lies
Are there any differences between estimating and forecasting the short-run variables and the long-run variables? What would be the difficulties associated with any or both?
Are there any noticeable differences between the methods of forecasting consumer demand and forecasting a firm’s cost or output?
Why would forecasting cost and output be important and how would it serve managers in their decision making?
What is the epistemic model and how appropriate is it for a CES production function to represent such a model in a matter of the empirical estimation?
What is the estimation process? What is the rationale behind it and how would it be different in estimating the cost in estimating the output?
The following table shows the units of labor used to produce a certain product, the fixed cost, and the variable cost in the first three columns. Fill in the rest of the columns after calculating all the required values.
Explain the concept of break-even point in at least four types of that point. Compare and give the formula for each one.
Explain and compare the following concepts: Economies of scale Diseconomies of scale Economies of scope The learning curve
What would determine the shape of the average cost curve in both the short-run and long-run? List the similarities and differences and draw both curves.
What would distinguish the short-run cost from the long-run cost? Compare their major concepts.
List as many cost concepts as you recall and explain each one and the purpose and justification for it.
The following table shows the number of units produced (Q), total revenue (TR), and the total cost (TC) of a product in a small firm. What would be the optimal size of production? How would you determine it and what would be the firm’s profit at the level of production? Is it the maximum profit
Provide a comparative explanation of the analytical tools for the optimal decisionmaking process between an individual consumer and a firm’s manager.
How would you tie the discussion on the three stages of production: production elasticity, the law of diminishing returns, and the returns to scale?
What is the production function? List and explain its various types. Also, explain its significance in the managerial decision making context.
List as many aspects as you can of the dynamic relationships between total product, marginal product of a variable of your choice, and the average product. Support your explanation with graphs.
Explain the concepts of short run and long run in production. Are they defined by certain periods of time? What is the significance of this type of term variability in production?
Use the exponential smoothing technique to predict the sales value of January 2013 given that the actual sales for December 2012 is 66,275 and the forecast sale is what you got in Column 3.Consider an α-value of 0.31.
Use the data in question 6 to calculate 5-month weighted moving average to obtain the forecast value of sales in January 2013 if the last 5 months of 2012 are weighted by 0.12, 0.17, 0.15, 0.21, 0.19, respectively.
Consider the following actual data for sales during the 12 months of 2012.Month Actual Sales Three-Month Moving Average MAD1 MAD2 January 71,290 February 70,912 March 62,540 April 64,258 May 68,912 June 70,512 July 72,436 August 70,887 September 68,500 October 64,312 November 61,850 December
Explain the econometric method of forecasting and describe the process from specifying the econometric equation to having the final results of forecasted variables. How would you rank the econometric models among the rest of the forecasting models and why?
Explain the concept of smoothing in forecasting. List and compare the various types of smoothing techniques and when they would be needed and how would they work.
List and explain the possible variations in the time series data. How are they different from each other? How would they affect the data and how would they be counted for?
List and compare the various models of forecasting in terms of their advantages, disadvantages, and how they fit into specific needs of the business firms.
Explain the nature and purpose of economic forecasting and how significant it is in the context of managerial economics.
Estimate the regression equation (Q) for the following demand data where the independent variables are price (P) and consumer income (I). Also, test the statistical significance of the estimated parameters at the 5% level and show to what extent the independent variables can explain the variation
The following data are for a small firm:Revenue Advertising Expenditures 88,000 80,000 84,000 92,000 96,000 104,000 108,000 116,000 118,000 120,000 20,000 18,000 22,000 24,000 22,000 24,000 26,000 26,000 28,000 30,000(a) Use the regression method to show how spending on advertisement affects the
What is PAD? How does it work? How important is it to empirically estimate market demand?
What are the major problems that may arise in the execution of the regression method?Explain how they are checked, their effects on the results and their interpretation, and how they are corrected.
Describe the process of demand estimation by the regression method from the beginning to the end and specify what it needs to be a reliable method of estimation.
Reviewand compare the advantages and disadvantages of the different methods available for demand empirical estimation.
What is the significance of demand estimation? Discuss how it is important to the theory and to managers and their business strategies.
Consider a consumer’s demand function for a small window air conditioner:P = 100 − 2Q.(a) If this consumer is willing to pay $96.00 a piece, how many units would he or she buy?(b) If at the store the consumer finds this item on sale for $82.00, how many units would he or she buy?(c) How would
The following are the demand and supply functions of all-purpose flour:QD = 6000 − 3000P, QS = 2400 + 3000P.(a) Find the equilibrium price and quantity.(b) If the government imposes a price floor of $1.20 on this commodity, what would happen to the quantities demanded and supplied?
The following are the demand and supply functions of milk:QD = 100 − 20P, QS = 40 + 5P.(a) Find the equilibrium price and quantity.(b) If a price ceiling of $6.00 is imposed and the demand rises to QD = 150 − 20P, what would be the consequences in the market?
The following are the total utilities of commodities x and y:Q TUx TUy 1 30 20 2 55 38 3 75 54 4 90 68 5 100 80 (a) Find the marginal utilities of both commodities.(b) Draw the total utility and marginal utility curves for both commodities separately.(c) Find the consumer’s optimal combination
Suppose that the demand and supply functions of pineapples are given by Qd = 2000 − 400P, Qs = 1600P.(a) Find the equilibrium price and quantity.(b) Find the equilibrium price and quantity after the local government imposes a 20/c sales tax on pineapples.(c) Find the equilibrium price and
Compare the weak axiom of revealed preference with the strong axiom of revealed preference.
What does it mean to say a demand function is homogeneous of degree zero and what is the significance of that?
Explain the difference between the legal incidence of taxes and the economic incidence of taxes.
If there is a new sales tax of $100 on wide-screen TVs and an excise tax of $1.00 on tobacco farmers, how would the demand of wide-screen TVs and the supply of tobacco be affected?
While the change in quantity demanded or supplied is only caused by price change, list as many factors as you can that would cause shift in demand and supply separately.
Using both the substitution and Lagrangian solutions, maximize the following utility function:U = 5x + 3y s.t. 2x + 4y = 100.
Tina has $40 to spend between chocolate (C) and milk (M) where the price of chocolate is $8.00 and the price of milk is $4.00. Draw her budget line and redraw when (a) the price of chocolate drops by 50% and the price of milk increases by 25%, (b) the price of milk decreases to $2.00 and the price
If a CES utility function is U(x1, x2) = xα1+ xα2 , where α is a positive constant. Find the MRS.
Where would the consumer equilibrium be if the utility function is: U = 3x + 6y and the price of x is $2.00 and the price of y is $4.00?
Find the optimal choice for Martin who buys ham (H) and potatoes (P) when their prices are: Ph = $4.00 and Pp = $1.50. His utility function is U=5H+24P.
Explain why it is rare to find Giffen commodities in real life.
Think of two more examples of each of the following and determine the type of MRS and draw the appropriate indifference curve for each: Perfect substitutes Perfect complements Neutral commodities Undesirable commodities
Explain whatwould logically justify the equality of the following terms in the consumer equilibrium condition: MUx MUy Px Py
Compare the marginal rate of substitution (MRS) with the marginal rate of transformation(MRT) and explain what would each one convey about consumer choices.
Explain how convexity of the indifference curve indicates that consumers generally prefer average choices over extremes.
Maximize x, y; subject to x + y = 10.
Interpret the symbol ln graphically.
Maximize x + y; subject to x y = 100.
Evaluate: 3.41592.1828/3.14159−2.71828.
Evaluate: (3.141592.71828) (3.14159−2.71828).
Explain the following statistical concepts and their need in economics and, specifically, their application in managerial economics: Random variable Probability density function Maximum likelihood Ordinary squares method
What is optimization? What are the types of optimization and how significant is this mathematical concept in economic applications?
What is a derivative and how important is it to economics?
How are exponents related to logarithms? Provide an example to illustrate your explanation.
What is the difference between the mathematician’s and economist’s graphs for demand and supply? Take any set of demand and supply functions and graph them according to both perspectives.
Explain the concepts of entrepreneurship, management, and leadership and set the link between an entrepreneur, a manager, and a CEO of a firm. How do the three work to set the firm and optimize its efficiency?
Explain the concept of profit from both accounting and economic perspectives. What would make the two different from each other? Will this difference have any practical mix-up when it comes to the managerial decision making?
What is the descriptive approach? How is it different from the prescriptive approach and where would managerial economics stand?
What is the scientific method and how is it different from the nonscientific methods?Why is it important for students to know this kind of material? Does it really have any significance in real life? If so, try to provide an example.
What is paradigm and how is it different from theory? Can you provide an example to set the two apart?
What are the major methodological fallacies and why should we be concerned about them? Try to provide an example of each fallacy, especially something that you may have already contemplated in your daily life.
List and explain the four major steps of the decision-making process according to the scientific approach.
What is opportunity cost? Is it one of the important considerations for economists?
How different is managerial economics from economics and how is it related to both microeconomics and macroeconomics?
What are the qualitative fundamentals and why are they important to know for the study of managerial economics?
Explain the role of economies of scope in decisions about horizontal integration.
How can outsourcing resolve the monopoly power of an internal supplier?
A car manufacturer has experienced holdup by its supplier of electronics. Should the car manufacturer produce the electronics internally?
How does vertical integration affect moral hazard?
In the context of an incorporated business, explain the meaning of: (a) residual control; (b) residual income.
Why do businesses enter into contracts that are deliberately incomplete?

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Managerial Economics 6th Edition Ivan Png - Solutions

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