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# King Graduate College MG 640 Managerial Economics 2015 Final Exam

Question # 00060909
Subject: Economics
Due on: 04/14/2015
Posted On: 04/12/2015 12:53 AM

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MG 640 Managerial Economics April 7, 2015

Final Exam

Name: …………………………………… ………………………………………..

PART I : Problem/Discussion

1. Why would you expect unemployment to fall during an economy’s expansionary phrase and to rise during a contractionary phrase? Discuss and make reference to the business cycle.

2. Why does GDP measure only final goods and services produced rather than all goods and services produced?

3. Why is the aggregate demand curve downward sloping? Discuss and use graphs where necessary.

4. Complete Table below for

a) Total Cost (TC)

b) Average variable cost (AVC)

 Q FC VC TC (FC+VC) AVC (VC/Q) 0 1000 20 1000 50 1000 90 1000 125 1000 145 1000 160 1000

5. Use Table above and answer the following questions

A. What is the total cost of producing 125 units of output

a. 1000 c. 1400

b. 2050 d. 2400

B. What is the average variable cost of producing 50 units of output?

a. 21 c. 14

b. 34 d. 20

C. What is the average total cost of producing 160 units of output?

a. 12.98 c. 22.04

b. 16.31 d. 19.38

6. The following table summarizes the short-run production function for your firm. Your product sells for \$5 per unit, labor costs \$5 per unit, and rental price of capital is \$20 per unit.

Complete the following table, and then answer the accompanying questions.

 K L Q MPK APK APL VMPK 0 5 0 1 5 10 2 5 30

1. Which inputs are fixed inputs? …… ……………………………….
2. Which are the variable inputs? … ……………………………….
3. How much are your fixed costs? ………………………………………
4. What is the variable cost of producing 10 units of output?

………………………………………………………………

1. To open a new business, a manager must obtain a license from the city for \$20,000. The license is transferable, but only \$3,000 is refundable in the event the firm does not use the license.

a. What ate the firm’s fixed costs? ……………………………

b. What is firm’s sunk costs? …………………………………………………….

c. Suppose the manager obtains a license but then decides against the business. If another firm offers the manager \$2,000 for the license, should the manager accept the offer? Explain

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….

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#### King Graduate College MG 640 Managerial Economics 2015 Final Exam

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Posted On: 04/12/2015 12:54 AM
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