Managerial Economics Mt445 Unit 7 Assignment

[ MT445 | Managerial Economics ] Unit 1 Assignment Student Name: Colleen Egan 1. Analyze whether each of the following is primarily a microeconomic or a macroeconomic issue: i. Setting the price for a cup of coffee. - Microeconomic ii. Measuring the impact of tax policies on total household spending in the economy - Macroeconomic iii. A household’s decision regarding whether or not to go on vacation - Microeconomic iv. A worker’s decision regarding which job to accept - Microeconomic v. Designing government policies to address issues with the social security program - Macroeconomic 2. Explain why each of the following is either a positive or normative economic statement. i. A 40-cent-per-pack tax on cigarettes will reduce teenage smoking by 10 percent. This would be a normative economic statement, as one would think that increasing taxes on cigarettes ought to reduce the temptation or reduce the number of teenaged smokers. ii. The federal government should spend more on diabetes research. This would be a normative economic statement because it is an opinion of what someone feels ought to be spent on diabetes research. iii. Rising paper prices will increase book prices.

Unformatted text preview: [MT445 | Managerial Economics] Unit 5 Assignment Student Name: Please answer the following questions. Submit as a Microsoft Word® document to the Dropbox when completed. 1. How does the demand curve faced by a perfectly competitive firm differ from the market demand curve in a perfectly competitive market? Explain. The demand curve faced by a perfectly competitive firm differs from the market demand curve in a perfectly competitive market because the perfectly competitive market is downward sloping because of the goods and services produced, The line is horizontal in a market demand curve because the market value sets the price. A firm will lose profits if they set the price below the market price. It does not matter how much a firm sells or provides it will not be able to affect the market price. http://www.cliffsnotes.com/more-subjects/economics/perfect-competition/demand-in-a-perfectly-competitivemarket [MT445 | Managerial Economics] 2. A perfectly competitive firm has the following fixed and variable costs in the short run. The market price for the firm’s product is $140. Output 0 1 2 3 4 5 6 a. FC $90 90 90 90 90 90 90 VC $ 0 90 170 290 430 590 770 TC __90_ _180__ _260__ _380__ _520__ _680__ _860__ TR Profit/Loss _0__ -50___ _140__ -40___ _280__ 20___ 420___ 40___ 560___ 40___ 700___ 20___ 840___ -20___ Complete the table. b. What level of output should the firm produce to maximize profits? 4 c. Assume this firm is making a loss when it produces its 7 th unit of output. What should the firm do in the short-run? The firm should produce more in the short run then cut back on the output. 3. How does the profit maximization condition for a monopoly differ from that for a perfectly competitive firm? How does this difference impact efficiency under each market structure? A monopoly will produce less and charge more and a perfectly competitive industry will produce more and charge less. The difference is monopoly causes dead weight and they lose money because their prices are set to high. 4. The following table provides market share information about the soft-drink industry. Company Coca-Cola Pepsi-Co Cadbury Schweppers Other Market Share 37% 35 17 11 [MT445 | Managerial Economics] a. Do you think the Department of Justice and the Federal Trade Commission would approve a merger between any two of the first three companies listed? Explain. No because it will increase market power. b. Do you think this market has barriers to entry? If so, what might they be? No I do not think they have barrier to entry because there is numerous soda industries out there. Directions for Submitting your Assignment Complete your Assignment in this Microsoft Word® document and save it as Username-MT445AssignmentUnit#.doc (Example:TAllen-MT445Assignment-Unit5.doc). Submit your file by selecting the Unit 5: Assignment Dropbox by the end of Unit 5. Unit 5 Assignment Content and Analysis Points Possible Problem #1 How does the demand curve faced by a perfectly competitive firm differ from the market demand curve in a perfectly competitive market? Explain. 8 Problem #2 A perfectly competitive firm has the following fixed and variable costs in the short run. The market price for the firm’s product is $140. Complete the table (a) 7 What level of output should the firm produce to maximize profits? (b) 4 Assume this firm is making a loss when it produces its 7th unit of output. What should the firm do in the short-run? (c) 4 Problem #3 How does the profit maximization condition for a monopoly differ from that for a perfectly competitive firm? How does this difference impact efficiency under each market structure? 8 Problem #4 The following table provides market share information about the soft-drink industry. (a-b) 8 Writing Style, Grammar, and APA Format. 6 Total 45 Points Earned [MT445 | Managerial Economics] ...
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