Advance managerial economic
Class level: Master
Each question answer should be no more than 50 words
1- A) The 8th edition of your Econ text book was recently published.
The publisher has changed the hardcover to soft cover and reduced 200 pages.
(The print size is smaller) the price of the text book unchanged from the 7th edition.
Suppose the publisher did a study that showed students have no differences in willing to buy new format than the old editions (demand remain unchanged).
Based on these information given is the publisher’s pricing consistent with short run profit maximization? True or falls briefly explain?
Unrelated to the above
B) If the firm short run average cost is declining as outputs it is true that it has not reached the point of marginal return in production.
True or false briefly explain?
2- A) a major lavages casino once owned over $200 million worth of fine art which want to display.
The purpose to draw patrons to the hotel and casino.
Suppose the Art display increased revenue minus operating cost (including income tax and maintenance and security for exhibiting the art) by $4 million a year.
Based on the increasing the revenue manager decided to continue exhibiting the art? Was this decision correct? Briefly explain?
Unrelated to the above
B) At the price of a monopoly charging for its products the amount of the elasticity of de demand is -.
Does this suggest the monopolist by exploiting its costumer due to lack of any competitive alternatives?
3-A) The “gadget” market is perfectly competitive and in long- run equilibrium.
Three different consultant debating the effect on price if there were to be a large permanent fall I price.
The first consultant predicts gadget price would slowly fall but then rebound quickly.
A second consultant predicts gadget price would fall quickly but then rebound slowly.
The third analysis says the gadget price would fall quickly with no rebound at all which analyst is true? And why briefly explain
(Unrelated to the above)
3-B) Why should company allocate the price lower than marginal cost in short term to gain more profit in long term production?
4) Alpha is a perfectly competitive firm in the national “zip” market which is long run equilibrium.
Suppose the government were to now require all zip firms to pay an annual tax of $100,00, because of its political connections, Alpha is exempted from paying that tax.
Because of the exemption, alpha’s should not see a change in its profit.
Is this true in short-run? In long –run? Briefly explain?