Econ

Suppose the growth rate of the firm's profit is 5 percent, the interest rate is 6 percent, and the current profits of the firm are $80 million. What is the value of the firm?

$8,480million (do the work)

Suppose demand is given by Qx d = 50 − 4Px + 6Py + Ax, where Px = $4, Py = $2, and Ax = $50. What is the advertising elasticity of demand for good x?

0.52 (do the work)

The differnce between marginal benefits and marginal cost is the

Marginal net benefits

Which of the following statements is incorrect?

None of the statements is correct

The elasticity which shows the responsiveness of the demand for a good due to changes in the price of a related good is the:

cross price elasticity

As we move down along a linear demand curve, the price elasticity of demand becomes more?

inelastic

If there are few close substitutes for a good, demand tends to be relatively

inelastic

Demand is perfectly elastic when the absolute value of the own price elasticity of demand is:

infinite

A firm will maximize the present value of future profits by maximizing current profits when the

interest rate is larger than the growth rate in profits and both are constant

The own price elasticity of demand for apples is −1.2. If the price of apples falls by 5 percent, what will happen to the quantity of apples demanded?

it will increase 6 percent

Maximizing the present value of all future profits is the same as maximizing current profits if the growth rate in profits is:

less than the interest rate

Suppose the equilibrium price in the market is $10 and the price elasticity of demand for the linear demand function at the market equilibrium is −1.25. Then we know that:

mariginal revenue is $2

To an economist, maximizing profit is

maximizing the value of the firm

"Our marginal revenue is greater than our marginal cost at the current production level." This statement indicates that the firm:

should increase the quanity produced to increase profits

Accounting profits are?

total revenue minus total cost

Economic profits are?

total revenue minus total opportunity cost

Marginal revenue of producing the third unit?

total revenue-total costs

Managerial economics is

valuable to the coordinator of a shelter for the homeless

The cross-price elasticity of demand between goods X and Y is −3.5. If the price of X decreases by 7 percent, the quantity demanded of Y will:

increase by 24.5

If the interest rate is 12.5 percent, what is the present value of $200 received in one year?

$177.78 (do the work)

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

12y (do the work)

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?

2,812.5 (do the work)

If the demand function for a particular good is Q = 20 − 8P, then the price elasticity of demand (in absolute value) at a price of $1 is:

2/3

You are the manager of a popular hat company. You know that the advertising elasticity of demand for your product is 0.25. How much will you have to increase advertising in order to increase demand by 5 percent?

20%

When MB=300-12y and TC=12y+108, the optimal level of y is

24 (do the work)

Suppose Qx d = 10,000 − 2Px + 3 Py − 4.5M, where Px = $100, Py = $50, and M = $2,000. How much of good X is consumed?

950 units (plug in the #)

The demand for good X is estimated to be Qx d = 10, 000 − 4PX + 5PY + 2M + AX, where PX is the price of X, PY is the price of good Y, M is income, and AX is the amount of advertising on X. Suppose the present price of good X is $50, PY = $100, M = $25,000, and AX = 1,000 units. Based on this information, the income elasticity of good X is:

Dont know how this is solved, answer is 0.82

Suppose the income elasticity for transportation is 1.8. Which of the following is an INCORRECT statement?

Expenditures on transportation will fall less rapidly than income falls.

Which of the following is an implicit cost to a firm that produces a good or service?

Foregone profits of producing a different good or service

Finding the present Value?

Pv=Fv/(1+i)^n, pv=fv-ocw, Pv=nEt=1 Fvt/(1+i)^t

If the absolute value of the own price elasticity of steak is 0.4, a decrease in price will lead to?

a reduction in total revenue

Assume that the price elasticity of demand is −2 for a certain firm's product. If the firm raises price, the firm's managers can expect total revenue to?

decrease

When a demand curve is linear

demand is inelastic at low prices.

as more firms enter an industry

economic profits decrease

The value of the firm is the

present discounted value of all future profits

Find the percent value (single value)

pv=fv/(1+i)^n

if marginal costs exceed marginal benefits, then

the firm should decrease its production level.

The higher the interest rate the?

the smaller the present value of a future amount