ManagerialEconomicsHOMEWORKSET#1Name:Class:Student#:(Dueday:Nextclass)Part1:1.Aperfectlycompetitivemarkethas:a)manybuyersandsellers.b)severallargebuyers.c)ameetingplaceforbuyersandsellers.d)a)andb)e)a)andc)Choose:a)Theremustbenumeroussmallbuyersandsellersforamarkettobeperfectlycompetitive.Ameetingplaceisunnecessary.2.BoeingCorporationandAirbusIndustriesaretheonlytwoproducersoflong-rangecommercialaircraft.Thismarketisnotperfectlycompetitivebecause:a)Eachcompanyhasannualsalesover$10billion.b)Eachcompanycansignificantlyaffectprices.c)AirbusreceivessubsidiesfromtheEuropeanUnion.d)AirbuscannotsellaircrafttotheUnitedStatesgovernment.e)Alloftheabove.Choose:b)Thecharacterofmonopolymarketiseachfirmcanaffectprices.3.Iftherealpriceofacollegeeducationhasrisenduringaperiodofinflation:a)itsnominalpricehasnotchanged.b)itsnominalpricehasrisenslowerthanageneralindexofprices.c)itsnominalpricehasrisenfasterthanageneralindexofprices.d)itscurrentdollarpricehasnotchanged.e)Noneoftheaboveiscorrect.Choose:c)Whenthenominalpriceofacollegeeducationrisesfasterthantherateofinflation,therealpriceofacollegeeducationwillrise.4.Theconstantdollarpriceofagood:a)isthesameasitsrealprice.b)isthesameasitsnominalprice.c)adjustsforinflationintheoverallpricelevel.d)b)andc)e)a)andc)Choose:e)Bydefinition,theconstantdollarpriceisequaltotherealprice,andbothadjustthenominalpricefortheeffectsoftheinflation.5.Thepriceofasandwichwas$0.29in1970and$0.99in1993.TheCPIwas38.8in1970and144.0in1993.The1993priceofasandwichin1970dollarsis:a)$0.08.b)$0.27.c)$0.34.d)$3.67.Choose:b)0.99/x=144/38.8x=0.276.Whichofthefollowingwouldshiftthedemandcurvefornewtextbookstotheright?a)Afallinthepriceofpaperusedinpublishingtexts.b)Afallinthepriceofequivalentusedtextbooks.c)Anincreaseinthenumberofstudentsattendingcollege.d)Afallinthepriceofnewtextbooks.Choose:c)non-pricedemand-determiningvariables7.Plasticandsteelaresubstitutesintheproductionofbodypanelsforcertainautomobiles.Ifthepriceofplasticincreases,withotherthingsremainingthesame,wewouldexpecta)thepriceofsteeltofall.b)thedemandcurveforsteeltoshifttotheright.c)thedemandcurveforplastictoshifttotheleft.d)nothingtohappentosteelbecauseitisonlyasubstituteforplastic.e)thedemandcurveforsteeltoshifttotheleft.Choose:b)thedefinitionofsubstitutes8.Lastmonthyousold10,000stereosnationwideat$400each.Themonthbeforethatyousold9,000stereosat$410each.Nextmonth,youarethinkingofcuttingthepriceevenfurtherto$389.99.Assumingthat(i)themarketdemandforyourproductislinear,and(ii)allelseremainsequal,whatisyourpredictionfornextmonth’ssales?a)10,100units.b)11,000units.c)11,001units.d)11,051units.e)12,000units.Choose:c)Usingthetwodatapoints,findtheslopeandinterceptofthedemandcurve:(9,000-10,000)/(410-400)=-100and10,000=a-100(400),ora=50,000.Thus,theequationofthelineisQ=50,000-100P.WhenP=$389.99,Q=11,001.Thenext9-11questionsrefertothefollowingdemandandsupplycurves:QD=189–2.25PQS=124+1.5PYouranswersshouldbecorrecttotwodecimalplaces.9.Theequilibriumpriceis:a)$84b)$82.67c)$17.33d)$150e)Noneoftheaboveiscorrect.Choose:c)SettingQS=QD,weobtain124+1.5P=189–2.25P.Collectingterms,3.75P=65,orP=$17.33.10.Theequilibriumquantitysoldis:a)65b)150c)313d)84e)NoneoftheaboveiscorrectChoose:b)UsingP=17.33(fromabove),QS=124+1.5(17.33)=150.11.Atthemarketequilibrium,thepriceelasticityofdemandequals:a)-2.25b)+2.25c)-0.26d)-0.17e)Noneoftheabove...
