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ECON 545 Business Economics Course Week 2 Project part 1 Complete Answer

ECON-545-Business Economics_Course _Week 2_Project part1_A+_Answer

ECON-545-Business Economics_Course _Week 2_Project part1_A+_Answer

Course Project – Part 1
This course contains two project assignments — Project Part 1 in Week 2, and Project Part 2 in Week 5. Because of this, you will need to spend additional time and effort in Weeks 2 and Week 5.
Overview

Project Part 1 (PP1)
Project Part 1 (PP1) consists of performing application-oriented exercises wherein the specific economic principles learned in this course are put to practical use. You must translate your ideas into economic analysis using the specific economic theory and economic terms contained in the TCOs covered in the course, and demonstrate that you are understanding and utilizing material from text chapters covered up to this point in the course, to receive full credit on the assignment.
You are being asked to submit a report containing responses to three exercises. Exercise 1 entails a choice of one topical microeconomic issue out of two possible alternatives. Exercises 2 and 3 entail a choice of two textbook questions out of a list of possible alternatives.
Exercise 1

Choose one of the following two microeconomic issues:
1. Everyone’s Gasoline Problem. We are all familiar with fluctuating prices of gasoline at the pump. Why does this happen? Research the recent history of gasoline pricing in your area, and attempt to relate any fluctuations you observe to documented supply and demand factors, as outlined in our book. Be sure to cite any references used.
2. Ethical Issues in Business. It seems that every day lately we are confronted with a new company that has acted at least unethically and possibly illegally in the operation and financial reporting of their company’s business dealings? Briefly discuss one of these issues and then see if you can relate the issue to ANY of our TCOs. That is, are there any effects on demand or on supply related to this topic? How would you expect this to affect the equilibrium price and equilibrium quantity for this company’s products and services? Is the elasticity of demand or supply affected? What about the effect on production levels and costs? Are ethical issues more likely to occur in one market type rather than another market type? You don’t have to cover all of these topics. I’ve just suggested some possible connections to our TCOs. Any connection to our TCOs is fine here.
Exercises 2 and 3

Select any two out of the following questions from the text:
• Chapter 3, Question 14
• Chapter 3, Question 15
• Chapter 5, Question 17
• Chapter 5, Question 18
• Chapter 7, Question 15
• Chapter 8, Question 11
• Chapter 8, Question 14

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Essay short run and long run in economics long run cost Answer

Essay short run and long run in economics long run cost Answer

Essay short run and long run in economics long run cost Answer


Answer the following questions in Essay APA format -1850 words per question.
1. Explain/define the following:
–short run and long run in economics
–economic cost versus accounting cost
–the concept of the production function
2. In a short run production situation explain the behavior and relationship of the following production variables and how they relate to each other and to quantity of production:
–total output or product
–marginal product
–the concept of diminishing marginal returns in terms of production
Also explain how marginal product is used to determine the equilibrium amount of each resource used in production in the short run.
3. In a short run production situation explain the behavior and relationship of the following costs curves and how they relate to each other and to quantity of production:
–the relationship between profit maximization and the production function/cost
–total costs
–average variable cost
–average total cost
–average fixed cost
–marginal cost
–the concept of diminishing marginal returns as it relates to cost
4. Explain long run cost. Be sure to cover the relationship of long run cost to long run output and how long run cost curves are related to short run cost curves. Explain economies and diseconomies of scale. Also, how do long run cost relate to industry

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ECON 545 Business Economics Course Week 6 Monetary and Fiscal Policy You Decide Answer

ECON 545 Business Economics Course Week 6 Monetary and Fiscal Policy You Decide Answer

ECON545 – Week 6 You Decide Transcript

The U.S. economy has fallen into a recession. It is a severe and deep recession, and one that
some economic analysts say may persist for at least another year. The unemployment rate has
risen to levels not seen in over 20 years. The current unemployment rate is at 8% and is
expected to rise further. The inflation rate is -2.4 percent, meaning that overall, prices are falling.

Your Role
You are the new senior economic advisor to the President of the United States, and he has
asked for your recommendation on how to proceed. Since you are an experienced Washington
consultant, you know that you should first consult several other experts and get their advice.
The following colleagues have expressed their insights and recommendations.

Keyplayers
Keyplayers Text for Audio Recording
Raymond Burke,
Economic Consultant

Kathy Lee, Former
Economic Advisor to
the President

Patricia Lopez,
Consultant to the
Federal Reserve

Allison Tanney,
Economic Consultant

Well, first we have to distinguish between fiscal policy and monetary
policy. As you know, the President does have some control over fiscal
policy, along with Congress of course – but concerning monetary
policy, only the Federal Reserve Bank can determine and execute
monetary policy.

I would recommend that the President lowers interest rates further to
help businesses and consumers get back on their feet.
I think the President should consider raising taxes and reducing
government spending. This will help correct the budget deficit problem
and help the economy get rolling again.
People will respect this tough decision and once they see that the
economy is improving, they will not mind the tax increase as much.
I’ll just comment on Fed Policy, as that was my background and
expertise. As you know, the Fed has three tools with which to address
stability and the growth of our economy. They control the discount rate
and federal funds rate, open market operations, and the bank reserve
requirement.
I think the Fed should leave interest rates alone, but strongly sell
bonds and raise the bank reserve requirement. This will increase the
money supply and allow banks to be more stable if they hang on to a
greater percentage of their customers’ deposits.
As I see it, we need both expansionary fiscal policy and expansionary
monetary policy. The President should work with Congress to increase
government spending and lower taxes.

As far as monetary policy is concerned, the Federal Reserve Board
needs to increase the money supply by buying bonds, raising interest
rates, and if necessary, raising the reserve requirement.

Activity
Your task is to take this advice and produce your own recommendation to the President. Do not
simply choose one person’s advice, but pick and choose from each recommendation that you
receive. Be sure to list what you believe and why you believe it is sound advice from each of
your colleagues, and also what you disagree with, and why you disagree with your
colleagues. Then, produce a consolidated recommendation of your own.

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ECO 372 Week 5 Learning Team Fiscal Policy Paper

ECO 372 Week 5 Learning Team Fiscal Policy Paper

ECO 372 Week 5 Learning Team Fiscal Policy Paper

ECO 372 Week 5 Learning Team Fiscal Policy Paper
Discuss within your Learning Team how and why the U.S.’s deficit, surplus and debt have an effect on the following:

• Tax payers
• Future Social Security and Medicare users
• Unemployed individuals
• University of Phoenix student
• The United State’s financial reputation on an international level
• A domestic automotive manufacturing (exporter)
• An Italian clothing company (importer)
• GDP

Write a 750- to 1,050-word paper summarizing the results.

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ECO 365 Week 3 Discussion Question Answers

ECO 365 Week 3 Discussion Question Answers

ECO 365 Week 3 Discussion Question Answers

Compare and contrast the conditions for a perfectly competitive market, monopolistic market, monopolistic competitive market and an oligopolies market? How would you explain the main differences among these market structures? Identify which market structure various industries compete in and why you think so.

In your own words, explain the difference between economic and accounting profits. How could you graphically illustrate economic profits made by a perfectly competitive firm; monopolist; and firm competing in a monopolistic competitive market? What conditions exist when economic profits are maximized?

What are some real-life examples of monopolistically competitive, oligopoly, and monopoly markets? How do market prices differ between perfectly and imperfectly competitive markets? Will a monopoly always produce at a profit-maximizing level of output? Explain your answer.

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ECO 365 Week 2 Discussion Question 1 Answer

ECO 365 Week 2 Discussion Question 1 Answer

ECO 365 Week 2 Discussion Question 1 Answer

Week 2 DQ 1

a) Would you ever turn down a job that paid more than the job you currently held? Why or why not? How does this relate to the concepts in Chapter 12?
b) Firms are always trying to achieve greater efficiency because if they can reduce costs, they can increase profits. Suppose one firm is shutting down an assembly plant while another firm is renegotiating work rules and changing the management structure without reducing inputs. What type of efficiency (technical efficiency or economic efficiency) is each firm pursuing?
c) What is the relationship between average and marginal productivity?
d) What are the impacts of innovation and technology on the cost of production?
e) What is the economic cost to the nation of discrimination? What types of policies do you think could help increase the benefits to those that do not discriminate, or increase the costs of those who do?

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ECO 365 Week 3 Current Market Conditions Competitive Analysis Answer

ECO 365 Week 3 Current Market Conditions Competitive Analysis Answer

ECO 365 Week 3 Current Market Conditions Competitive Analysis Answer

ECO 365 Week 3 Current Market Conditions Competitive Analysis Answer

ECO 365 Week 3 Current Market Conditions Competitive Analysis Answer


Imagine you are part of a strategic planning group at a large corporation that is considering developing a new proposed product. The marketing director has asked your team to do a competitive market analysis to determine the product’s potential success. The analysis will focus on your primary competitor in the product’s market.
Select a potential competitive organization and a product in that organization.

Write a 1,400 – 1,750-word paper of no more than analyzing the current market conditions. Address the following topics:

· A short history of the organization and a description of their product
· Factors that affect demand, supply, and equilibrium prices in the market in which the competitor organization operates: Define the market for your chosen product, including an analysis of its competitors, potential customers, or potential buyers.
· Any issues or opportunities your organization or industry faces that affect its competitiveness and long-term profitability with regards to your product: This may include, but is not limited, to the following elements.

o Price elasticity of demand
o Technological innovation
o The relationship between the amount of labor & capital employed and the law of diminishing marginal productivity
o Cost structure

· Factors affecting variable costs, including productivity and others that change the supply of and demand for labor
· Factors affecting fixed costs
Make recommendations on how your organization can maximize their profit-making potential, and successfully compete in the new market. Consider the effect your recommendations may have on marginal revenues and costs. Format your paper consistent with APA guidelines.

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ECO 365 Week 3 Team B Current Market Conditions Competitive Analysis

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ECO 365 Principles Of Microeconomics Final exam Correct Answers

ECO 365 Principles Of Microeconomics Final exam Correct Answers

ECO 365 Principles Of Microeconomics Final exam Correct Answers

ECO 365 Principles Of Microeconomics Final exam Correct Answers

ECO 365 Principles Of Microeconomics Final exam Correct Answers


ECO/365 Final Exam

1) An economist who is studying the relationship between the money supply, interest rates, and the rate of inflation is engaged in
A. microeconomic research
B. macroeconomic research
C. theoretical research, because there is no data on these variables
D. empirical research, because there is no economic theory related to these variables

2) A basic difference between microeconomics and macroeconomics is that microeconomics
A. focuses on the choices of individual consumers, while macroeconomics considers the behavior of large businesses
B. focuses on financial reporting by individuals, while macroeconomics focuses on financial reporting by large firms
C. examines the choices made by individual participants in an economy, while macroeconomics considers the economy’s overall performance
D. focuses on national markets, while macroeconomics concentrates on international markets

3) The distinction between supply and the quantity supplied is best made by saying that
A. the quantity supplied is represented graphically by a curve and supply as a point on that curve associated with a particular price
B. supply is represented graphically by a curve and the quantity supplied as a point on that curve associated with a particular price
C. the quantity supplied is in direct relation with prices, whereas supply is in inverse relation
D. the quantity supplied is in inverse relation with prices, whereas supply is in direct relation

4) After several years of slow economic growth, world demand for petroleum began to rise rapidly in the 1990s. Much of the increase in demand was met by additional supplies from sources outside the Organization of Petroleum Exporting Countries (OPEC). OPEC, during this time, was unable to restrain output among members in its effort to lift oil prices. What best describes these events?
A. The rise in demand shifted the demand for oil to the right. OPEC actions shifted the demand for oil back to the left.
B. The rise in demand shifted the demand for oil to the right. As price rose, the supply of oil also rose.
C. The rise in demand shifted the demand for oil to the right. As price rose, the quantity of oil supplied rose.
D. The rise in demand reflects a movement down along the demand curve as supply shifted to the right when suppliers produced more oil.

5) Price elasticity of demand is the:
A. change in the quantity of a good demanded divided by the change in the price of that good
B. change in the price of a good divided by the change in the quantity of that good demanded
C. percentage change in price of that good divided by the percentage change in the quantity of that good demanded
D. percentage change in quantity demanded of a good divided by the percentage change in the price of that good

6) If average movie ticket prices rise by about 5 percent and attendance falls by about 2 percent, other things being equal, the elasticity of demand for movie tickets is about:
A. 0.0
B. 0.4
C. 0.6
D. 2.5

7) When labor is the variable input, the average product equals the
A. marginal product divided by the number of workers
B. marginal product multiplied by the number of workers
C. number of workers divided by the quantity of output
D. quantity of output divided by the number of workers

8) The increase in output obtained by hiring an additional worker is known as
A. the average product
B. the marginal product
C. the total product
D. value added

9) Which of the following is the best example of a long-run decision?
A. An automobile manufacturing company is considering whether or not to invest in robotic equipment to develop a more cost-effective production technique.
B. An automobile manufacturing company is considering whether or not to expand its existing workforce, while keeping the same factory and equipment.
C. A business consulting firm is considering whether or not to hire interns to assist with research and data processing.
D. A business consulting firm is considering whether or not to add new computers while maintaining the same number of employees.

10) Other things being equal, when average productivity falls,
A. average fixed cost must rise
B. marginal cost must rise
C. average total cost must rise
D. average variable cost must rise

11) According to economist Colin Camerer of the California Institute of Technology, many New York taxi drivers decide when to finish work by setting an income goal for themselves. If this is true, then on busy days when the effective hourly wage is higher, taxi drivers will
A. work the same number of hours as they will on slower days
B. work fewer hours than they will on slower days
C. work more hours than they will on slower days
D. not work any hours

12) A firm’s demand for labor is derived from the
A. opportunity costs associated with labor and leisure
B. desires and needs of the entrepreneur
C. cost of labor inputs
D. demand for its output

13) Owen runs a delivery business and currently employs three drivers. He owns three vans that employees use to make deliveries, but he is considering hiring a fourth driver. If he hires a fourth driver, he can schedule breaks and lunch hours so all three vans are in constant use, allowing him to increase deliveries per day from 60 to 75. This will cost an additional $75 per day to hire the fourth driver. The marginal cost per delivery of increasing output beyond 60 deliveries per day
A. is $0 because Owen does not have to purchase another van
B. is $5
C. is $75
D. cannot be calculated without knowing Owen’s total fixed costs

14) Expected economic profit per unit is equal to
A. expected price
B. expected average total cost
C. the difference between expected average price and expected average total cost
D. the difference between expected total revenue and expected total cost

15) If a firm in a perfectly competitive market experiences a technological breakthrough,
A. other firms would find out about it eventually
B. other firms would find out about it immediately
C. other firms would not find out about it
D. some firms would find out about it, but others would not

16) A significant difference between monopoly and perfect competition is that
A. free entry and exit is possible in a monopolized industry, but impossible in a competitive industry
B. competitive firms control market supply, but monopolies do not
C. the monopolist’s demand curve is the industry demand curve, while the competitive firm’s demand curve is perfectly elastic
D. profits are driven to zero in a monopolized industry, but may be positive in a competitive industry.

17) A monopoly firm is different from a competitive firm in that
A. there are many substitutes for a monopolist’s product while there are no substitutes for a competitive firm’s product
B. a monopolist’s demand curve is perfectly inelastic while a competitive firm’s demand curve is perfectly elastic
C. a monopolist can influence market price while a competitive firm cannot
D. a competitive firm has a U-shaped average cost curve while a monopolist does not

18) The difference between a perfectly competitive firm and a monopolistically competitive firm is that a monopolistically competitive firm faces a
A. horizontal demand curve and price equals marginal cost in equilibrium
B. horizontal demand curve and price exceeds marginal cost in equilibrium
C. downward-sloping demand curve and price equals marginal cost in equilibrium
D. downward-sloping demand curve and price exceeds marginal cost in equilibrium

19) As long as marginal cost is below marginal revenue, a perfectly competitive firm should
A. increase production
B. hold production constant
C. decrease production
D. reconsider past production decisions

20) Because a monopolistic competitor has some monopoly power, advertising to increase that monopoly power makes sense as long as the marginal
A. benefit of advertising is positive
B. cost of advertising is positive
C. benefit of advertising exceeds the marginal cost of advertising
D. cost of advertising exceeds the marginal benefit of advertising

21) In the Flint Hills area of Kansas, proposals to build wind turbines to generate electricity have pitted environmentalist against environmentalist. Members of the Kansas Sierra Club support the turbines as a way to reduce fossil fuel usage, while local chapters of the Nature Conservancy say they will befoul the landscape. The Sierra Club argues that wind turbines
A. are a source of negative externalities
B. reduce negative externalities elsewhere in the economy
C. create a free-rider problem
D. are a way of solving a free-rider problem

22) When negative externalities are present, market failure often occurs because
A the marginal external cost resulting from the activity is not reflected in the market price
B. the marginal external cost resulting from the activity is reflected in the market price
C. the existence of imports from foreign countries takes jobs and income away from U.S. citizen
D. consumers will consume the good at a level where their individual marginal benefits exceed the marginal costs borne by the firm producing the good

23) A merger between a textile mill and a clothing manufacturing company would be considered a
A. horizontal merger
B. vertical merger
C. conglomerate merger
D. diagonal merger

24) A merger between a baby food company and a life insurance company would be considered a
A. horizontal merger
B. vertical merger
C. conglomerate merger
D. diagonal merger

25) From the point of view of consumer and producer surplus, what problem may be created when a country subsidizes the cost of energy to consumers to help alleviate the burden of higher energy costs?
A. It hurts the poor and benefits the rich.
B. It leads to less fuel being used than the amount that maximizes consumer surplus.
C. It encourages the consumption of too much fuel at the expense of other goods.
D. It has no effect; consumers gain a surplus, but taxpayers lose the same amount because they must finance the subsidy.

26) Suppose people freely choose to spend 40 percent of their income on health care, but the government decides to tax 40 percent of a person’s income to provide the same level of coverage as before. What can be said about deadweight loss in each case?
A. Taxing income results in deadweight loss, while purchasing health care on one’s own does not result in deadweight loss.
B. Taxing income results in less deadweight loss, because government knows better what health care coverage is good for society.
C. There is no difference because the goods are purchased in the market in either case.
D. There is no difference because the total spending remains the same and the health care purchased remains the same.

27) The U.S. textile industry is relatively small because the US imports most of its clothing. A clear result of the importation of clothing is
A. there is less variety available than there would be without imports
B. the quality of clothing is lower than it would be without imports
C. the price of clothing is higher than it would be without imports
D. the price of clothing is lower than it would be without imports

28) Countries can expect to gain from international trade as long as they
A. keep production diversified
B. specialize according to their comparative advantage
C. produce only those goods for which they have a relatively high opportunity cost
D. use trade restrictions to reduce competition for domestic producers

29) Which of the following is an example of the law of one price?
A. Exchange rates tend to have equivalent values. For example, one Italian lire equals one U.S. dollar.
B. Because people have essentially the same basic needs wherever they live, they tend to buy the same bundle of goods.
C. Because wages are so much lower in China, eventually all U.S. jobs will be outsourced to China, leaving the US to import all goods at one price.
D. Because their countries have similar institutions, the price paid for a computer in Germany and the United States are about the same when converted into the same currency.

30) The fact that U.S. managers’ salaries are substantially greater than those of comparable managers in Japan may be related to
A. an increase in the demand for CEOs
B. an increase in the supply of CEOs
C. the comparatively greater competitive markets in Japan
D. the greater number of public goods provided in the United States

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ECO 550 Quiz 1 Complete all 20 questions A+ Answer

ECO 550 Quiz 1 Complete all 20 questions A+ Answer

ECO 550 Quiz 1 Complete all 20 questions A+ Answer

ECO 550 Quiz 1 Complete all 20 questions A+ Answer


Eco 550 Quiz 1 Complete all 20 questions A+ Answer
Question 1
To reduce Agency Problems, executive compensation should be designed to:

Question 2
In the shareholder wealth maximization model, the value of a firm’s stock is equal to the present value of all expected future ____ discounted at the stockholders’ required rate of return.

Question 3
The primary objective of a for-profit firm is to ___________.

Question 4
The Saturn Corporation (once a division of GM) was permanently closed in 2009. What went wrong with Saturn?

Question 5
Various executive compensation plans have been employed to motivate managers to make decisions that maximize shareholder wealth. These include:

Question 6
A Real Option Value is:

Question 7
The flat-screen plasma TVs are selling extremely well. The originators of this technology are earning higher profits. What theory of profit best reflects the performance of the plasma screen makers?

Question 8
Possible goals of Not-For-Profit (NFP) enterprises include all of the following EXCEPT:

Question 9
Which of the following will increase (V0), the shareholder wealth maximization model of the firm:
V0∙(shares outstanding) = Σ∞t=1 (π t ) / (1+ke)t + Real Option Value.

Question 10
Economic profit is defined as the difference between revenue and ____.

Question 11
The approximate probability of a value occurring that is greater than one standard deviation from the mean is approximately (assuming a normal distribution)

Question 12
The ____ is the ratio of ____ to the ____.

Question 13
The closest example of a risk-free security is

Question 14
Generally, investors expect that projects with high expected net present values also will be projects with

Question 15
A change in the level of an economic activity is desirable and should be undertaken as long as the marginal benefits exceed the ____.

Question 16
The primary difference(s) between the standard deviation and the coefficient of variation as measures of risk are:

Question 17
The level of an economic activity should be increased to the point where the ____ is zero.

Question 18
Based on risk-return tradeoffs observable in the financial marketplace, which of the following securities would you expect to offer higher expected returns than corporate bonds?

Question 19
The standard deviation is appropriate to compare the risk between two investments only if

Question 20
The net present value of an investment represents

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ECO 550

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ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

ECON-545- Business Economics_Course Week 8 Final Exam_Answer_ALL Sets

1. Question :(TCO A) Suppose you are hired to manage a small manufacturing facility that produces Widgets.

(a.) (15 points) You know from data collected on the Widget Market that market demand and market supply have both increased recently. As manager of the facility, what decisions should you make regarding production levels and pricing for your Widget facility?

Remember that supply and demand are about the market supply and market demand, which is bigger than your own company. You are being given data on supply and demand for the whole market and are being asked what effect that has on you as a small part of that market.

(b.) (15 points) Now, suppose that following the supply and demand changes in (a), a substitute good goes up in price, and your costs of production increase. What new decisions will you make regarding production levels and pricing for your Widget facility?
(TCO B) Here is some data on the demand for marshmallows:

Price Quantity
$10 100
$ 8 300
$ 6 700
$ 4 1300
$ 2 2200

(a.) (15 points) Is demand elastic or inelastic in the $6-$8 price range? How do you know?

(b.) (15 points) If the table represents the demand faced by a monopoly firm, then what is that firm’s marginal revenue as it increases output from 1300 units to 2200 units? Show all work. (Be careful here!)
3. Question : (TCO C) You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below.
Total Total
Workers Labor Cost Output Revenue
1 $500 100 $700
2 1000 280 1150
3 1500 440 1440
4 2000 540 1570
5 2500 600 1670
6 3000 630 1710
7 3500 640 1730

(a.) (6 points) What is the marginal product of the second worker?

(b.) (6 points) What is the marginal revenue product of the fourth worker?

(c.) (6 points) What is the marginal cost of the first worker?

(d.) (12 points) Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer.

4. Question : (TCO C) Answer the next questions on the basis of the following cost data for a firm in pure competition:

OUTPUT —— TFC ———- TVC
0 $100.00 0.00
1 100.00 70.00
2 100.00 120.00
3 100.00 150.00
4 100.00 200.00
5 100.00 270.00
6 100.00 360.00

(a.) (15 points) Refer to the above data. If the product price is $45 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.

(b.) (15 points) Refer to the above data. If the product price is $75 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.

5. Question : (TCO D) A software producer has fixed costs of $18,000 per month and her Total Variable Costs (TVC) as a function of output Q are given below:

Q TVC Price
1,000 $15,000 $25
2,000 20,000 24
3,000 30,000 23
4,000 50,000 22
5,000 80,000 20
(a.) (15 points) If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic competitive market where the price of software at each possible quantity is also listed above? Why? (Show all work).

(b.) (15 points) What should be the production level if fixed costs rose to $48,000 per month? Explain.
6. Question : (TCO F)

(a.) (20 points) Suppose nominal GDP in 1999 was $200 billion, and in 2001, it was $270 billion. The general price index in 1999 was 100 and in 2001 it was 150. Between 1999 and 2001, the real GDP rose by what percent?

(b.) Use the following scenario to answer questions (b1) and (b2).
In a given year in the United States, the total number of residents is 270 million, the number of residents under the age of 16 is 38 million, the number of institutionalized adults is 15 million, the number of adults who are not looking for work is 17 million, and the number of unemployed is 10 million.

(b1.) (5 points) Refer to the data in the above scenario. What is the size of the labor force in the United States for the given year?

(b2.) (5 points) Refer to the data in the above scenario. What is the unemployment rate in the United States for the given year?
7. Question : (TCO G and H)

(a.) (15 points) Suppose your local Congress representative suggests that the federal government intervenes in the gasoline market to stop runaway price increases. Would you say that this view basically supports the Keynesian or the Monetarist school of thought? Why? What position would the opposing school of thought take on this issue? (Be brief — you can answer this in 2 or 3 brief paragraphs).

(b.) (10 points) Any change in the economy’s total expenditures would be expected to translate into a change in GDP that was larger than the initial change in spending. This phenomenon is known as the multiplier effect. Explain how the multiplier effect works.

(c.) (15 points) You are told that 90 cents out of every extra dollar pumped into the economy goes toward consumption (as opposed to saving). Estimate the GDP impact of a positive change in government spending that equals $20 billion.

8. Question : (TCO G)
(a.) (20 points) Third National Bank is fully loaned up with reserves of $20,000 and demand deposits equal to $100,000. The reserve ratio is 20%. Households deposit $5,000 in currency into the bank. How much excess reserves does the bank now have, and what is the maximum amount of new money that can be created in the banking system as a result of this deposit? Show all work.

(b.) (20 points) What is the discount rate in the banking system? Explain how the Fed manipulates this rate to achieve macroeconomic objectives.
9. Question : (TCO E and I) Let the exchange rate be defined as the number of dollars per British pound. Assume there is a decrease in U.S. interest rates relative to that of Britain.

(a.) (10 points) Would this event cause the demand for the dollar to increase or decrease relative to the demand for the pound? Why?

(b.) (10 points) Has the dollar appreciated or depreciated in value relative to the pound?

(c.) (10 points) Does this change in the value of the dollar make imports cheaper or more expensive for Americans? Are American exports cheaper or more expensive for importers of U.S. goods in Great Britain? Illustrate by showing the price of a U.S. cell phone in Britain before and after the change in the exchange rate.

(d.) (10 points) If you had a business exporting goods to Britain, and U.S. interest rates fell as they have in this example, would you plan to expand production or cut back? Why?

Set 1 Additional Questions:

Question 2. (TCO B) Suppose the governor of California has proposed increasing toll rates on California’s toll roads, and has presented two possible scenarios to implement these increases. Following are projected data for the two scenarios for the California toll roads:
Scenario 1: Toll rate in 2012: $10.00. Toll rate in 2016: $22.50
For every 100 cars using the toll roads in 2012, only 81.6 cars will use the toll roads in 2016.
Scenario 2:
Toll rate in 2012: $10.00. Toll rate in 2016: $17.50
For every 100 cars using the toll roads in 2012, only 96.2 cars will use the toll roads in 2016.
a. Using the midpoint formula, calculate the price elasticity of demand for Scenario 1 and Scenario 2. (10 points)
b. Assume 10,000 cars use California toll roads every day in 2012. What would be the daily total revenue received for each scenario in 2012 and in 2016? (6 points)
c. Is demand under Scenario 1 and under Scenario 2 price elastic, inelastic, or unit elastic. Briefly explain. (4 points)
(Points : 30)

Question 3. 3. (TCO C) You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below.
Total Total
Workers Labor Cost Output Revenue
1 $500 100 $700
2 1000 280 1150
3 1500 440 1440
4 2000 540 1570
5 2500 600 1670
6 3000 630 1710
7 3500 640 1730

(a.) (6 points) What is the marginal product of the second worker?

(b.) (6 points) What is the marginal revenue product of the fourth worker?

(c.) (6 points) What is the marginal cost of the first worker?

(d.) (12 points) Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer.
(Points : 30)

Question 4. 4. (TCO C) Answer the next questions (Parts A and B) on the basis of the following cost data for a firm operating in pure competition:

OUTPUT —— TFC ———- TVC
0 $500.00 0.00
1 500.00 70.00
2 500.00 130.00
3 500.00 170.00
4 500.00 200.00
5 500.00 300.00
6 500.00 510.00

(a.) (15 points) Refer to the above data. If the product price is $185 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.

(b.) (15 points) Refer to the above data. If the product price is $200 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations. (Points : 30)

Question 5. 5. (TCO D) A software producer has fixed costs of $20,000 per month and her Total Variable Costs (TVC) as a function of output Q are given below. Complete the table (TC, MC, TR, and MR), then answer Parts A and B.

Q TVC Price
2,000 $5,000 $25
4,000 7,000 22
6,000 18,000 20
8,000 33,000 10
10,000 50,000 1
(a.) (15 points) If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic competitive market where the price of software at each possible quantity is also listed above? Why? (Show all work.)
(b.) (15 points) What should be the production level if fixed costs rose to $70,000 per month? Explain.
(Points : 30)

Question 6. 6. (TCO F)

(a.) (20 points) Suppose nominal GDP in 1999 was $200 billion, and in 2001, it was $270 billion. The general price index in 1999 was 100 and in 2001 it was 150. Between 1999 and 2001, the real GDP rose by what percent?

(b.) Use the following scenario to answer questions (b1) and (b2).
In a given year in the United States, the total number of residents is 270 million, the number of residents under the age of 16 is 38 million, the number of institutionalized adults is 15 million, the number of adults who are not looking for work is 17 million, and the number of unemployed is 10 million.

(b1.) (5 points) Refer to the data in the above scenario. What is the size of the labor force in the United States for the given year?

(b2.) (5 points) Refer to the data in the above scenario. What is the unemployment rate in the United States for the given year? (Points : 30)

Question 7. 7. (TCO G and H)

(a.) (15 points) What are the arguments for and against the use of fiscal policy to fight inflation, lower unemployment, and raise GDP (Keynesian and Monetarist)?

(b.) (10 points) Any change in the economy’s total expenditures would be expected to translate into a change in GDP that was larger than the initial change in spending. This phenomenon is known as the multiplier effect. Explain how the multiplier effect works.

(c.) (15 points) You are told that 80 cents out of every extra dollar pumped into the economy goes toward consumption (as opposed to saving). Estimate the GDP impact of a positive change in government spending that equals $10 billion. (Points : 40)

Question 8. 8. (TCO G)

(a.) Reserve requirement for banks is set at 5%. Your firm withdraws $42,000 on its line of credit at the Security Bank to purchase equipment for expansion. The equipment vendor deposits the amount that he receives from you at his bank, The Highland Bank.

(10 points) By how much has each bank’s excess reserves changed as a result of your withdrawal and expenditure?

(10 points) What is the maximum amount of new money that can be created in the banking system as a result of your purchase? Show all work.

(b.) (10 points) Suppose that the Security Bank discovers its reserves will temporarily fall slightly short of those legally required. How might it remedy this situation through the Federal Funds market?

(10 points) Explain how the Fed manipulates the Federal Funds Rate in order to achieve macroeconomic objectives.
(Points : 40)

Question 9. 9. (TCO E and I) Let the exchange rate be defined as the number of dollars per Japanese yen. Assume that there is a decrease in U.S. interest rates relative to that of Japan.

(a.) (10 points) Would this event cause the demand for the dollar to increase or decrease relative to the demand for the yen? Why?

(b.) (10 points) Has the dollar appreciated or depreciated in value relative to the yen?

(c.) (10 points) Does this change in the value of the dollar make imports cheaper or more expensive for Americans? Are American exports cheaper or more expensive for importers of U.S. goods in Japan? Illustrate by showing the price of a U.S. e-reader in Japan before and after the change in the exchange rate.

(d.) (10 points) If you had a business exporting goods to Japan, and U.S. interest rates fell as they have in this example, would you plan to expand production or cut back? Why? (Points : 40)

Set 2

1. (TCO A) Suppose you are hired to manage a small manufacturing facility that produces Widgets.

(a.) (15 points) You know from data collected on the Widget Market that market demand has recently increased and market supply has recently decreased. As manager of the facility, what decisions should you make regarding production levels and pricing for your Widget facility?

Remember that supply and demand are about the market supply and market demand, which is bigger than your own company. You are being given data on supply and demand for the whole market and are being asked what effect that has on you as a small part of that market.

(b.) (15 points) Now, suppose that following the supply and demand changes in (a), a substitute good goes up in price, and your costs of production decrease. What new decisions will you make regarding production levels and pricing for your Widget facility? (Points : 30)

2. (TCO B) Here is some data on the demand for lettuce:

Price Quantity
$10 100
$ 8 120
$ 6 140
$ 4 160
$ 2 180

(a.) (15 points) Is demand elastic or inelastic in the $6-$8 price range? How do you know?

(b.) (15 points) If the table represents the demand faced by a monopoly firm, then what is that firm’s marginal revenue as it increases output from 160 units to 180 units? Show all work. (Be careful here!) (Points : 30)
. (TCO C) You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below.

Total Total
Workers Labor Cost Output Revenue
1 $200 50 $350
2 400 140 675
3 600 220 1120
4 800 270 1570
5 1000 300 1865
6 1200 315 2070
7 1400 320 2170

(a.) (6 points) What is the marginal product of the second worker?

(b.) (6 points) What is the marginal revenue product of the fourth worker?

(c.) (6 points) What is the marginal cost of the first worker?

(d.) (12 points) Based on your knowledge of marginal analysis, how many workers should you hire? Explain you answer. (Points : 30)
4. (TCO C) John operates a small business out of his home and has very little in terms of fixed costs. Answer the next questions (Parts A and B) on the basis of the following cost data for John’s firm operating in pure competition:

OUTPUT —— TFC ———- TVC
0 $30.00 0.00
1 30.00 70.00
2 30.00 120.00
3 30.00 150.00
4 30.00 200.00
5 30.00 270.00
6 30.00 360.00

(a.) (15 points) Refer to the above data. If the product price is $60, at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.

(b.) (15 points) Refer to the above data. If the product price is $55 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations. (Points : 30)
5. (TCO D) A software producer has fixed costs of $30,000 per month and her Total Variable Costs (TVC) as a function of output Q are given below:

Q TVC Price
3,000 $ 5,000 $5
13,000 25,000 4
23,000 50,000 3
33,000 80,000 2
43,000 120,000 1
(a.) (15 points) If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic competitive market where the price of software at each possible quantity is also listed above? Why? (Show all work.)
(b.) (15 points) What should be the production level if fixed costs rose to $50,000 per month? Explain.
6. (TCO F)

(a.) (20 points) Suppose nominal GDP in 1999 was $200 billion, and in 2001, it was $270 billion. The general price index in 1999 was 100 and in 2001 it was 150. Between 1999 and 2001, the real GDP rose by what percent?

(b.) Use the following scenario to answer questions (b1) and (b2).
In a given year in the United States, the total number of residents is 270 million, the number of residents under the age of 16 is 38 million, the number of institutionalized adults is 15 million, the number of adults who are not looking for work is 17 million, and the number of unemployed is 10 million.

(b1.) (5 points) Refer to the data in the above scenario. What is the size of the labor force in the United States for the given year?

(b2.) (5 points) Refer to the data in the above scenario. What is the unemployment rate in the United States for the given year? (Points : 30)
7. (TCO G and H)

(a.) (15 points) Suppose your local Congress representative suggests that the federal government intervenes in the gasoline market to stop runaway price increases. Would you say that this view basically supports the Keynesian or the Monetarist school of thought? Why? What position would the opposing school of thought take on this issue? (Be brief — you can answer this in 2 or 3 brief paragraphs).

(b.) (10 points) Any change in the economy’s total expenditures would be expected to translate into a change in GDP that was larger than the initial change in spending. This phenomenon is known as the multiplier effect. Explain how the multiplier effect works.

(c.) (15 points) You are told that 90 cents out of every extra dollar pumped into the economy goes toward consumption (as opposed to saving). Estimate the GDP impact of a positive change in government spending that equals $20 billion.
(Points : 40)
8. (TCO G)

(a.) Reserve requirement for banks is set at 5%. Your firm deposits its profits of $28,000 into the Third National Bank.

(10 points) How much excess reserve does your deposit generate for the bank?

(10 points) What is the maximum amount of new money that can be created in the banking system as a result of this deposit? Show all work.

(b.) (10 points) What is the Federal Funds Rate in the banking system?

(10 points) Explain how the Fed manipulates this rate in order to achieve macroeconomic objectives. (Points : 40)

9. (TCOs E and I) Let the exchange rate be defined as the number of dollars per Japanese yen. Assume that there is a relatively lower rate of inflation in the U.S. relative to that of Japan.

(a.) (10 points) Would this event cause the demand for the dollar to increase or decrease relative to the demand for the yen? Why?

(b.) (10 points) Has the dollar appreciated or depreciated in value relative to the yen?

(c.) (10 points) Does this change in the value of the dollar make imports cheaper or more expensive for Americans? Are American exports cheaper or more expensive for importers of U.S. goods in Japan? Illustrate by showing the price of a U.S. e-reader in Japan, before and after the change in the exchange rate.

(d.) (10 points) If you had a business exporting goods to Japan, and U.S. inflation fell as discussed above in this example, would you plan to expand production or cut back? Why? (Points : 40)

Set 3

1. Suppose you are hired to manage a samll manufacturing facility that produces widgets
A. You know form data collected on the widget marekt that the market demand has recently increased and mareket supply has recently decreased. As manager of the facility, what decison should you make regarding production levels and pricing for you wideget facility?
Remember that supply and deman are about the makert supply and market demand, which is bigger than your own company. You are being given data on supply and demand for the whole market and are being asked what effect that has on you as a small part of that market
B. Now suppose that follwing the supply and demand changes in (a) a subsitute good goes up in price, and your cost of product decrease. What decisons will you make regarding production levels and pricing for your widget facility?

2. Here is data on the demand for lettuce
Price Quantity
10$ 100
8$ 120
6$ 140
4$ 160
2$ 180
A. Is demand elastic or inelastic in the 6-8$ price range? How do you know?

(b.) (15 points) If the table represents the demand faced by a monopoly firm, then what is that firm’s marginal revenue as it increases output from 160 units to 180 units? Show all work. (Be careful here!) (Points : 30)
3.A Suppose nominal GDP in 1999 was 100billion and in 2001 it was 260billion. The general price index in 199 was 100, and in 2001 it was 180. Between 1999 and 2001, the real GDP rose by what present?

4. Suppose your local congress representive suggest that the federal government intervenes in the gasonline market to stop runaway price increases. Would you say that this view bsically supports the Keynesin or Monetarist school of thought? Why? What postion would the opposting school of though tke on this issue?
b. Any change in the economys total expenditures would be expected to translate into change in GDP that was larger than the initial change in spending. This phenomenon os known as the multiplier effect. Explain the multipler effect works.

c. you are told that 90 cents our of every extra dollar pumpled into the econoomy goes toward consumption (as opposed to saving) Estimate the GDP impact of positive change in govenment spending that equals 20 billion.

5. Reserve requirment for banks is set at 5%. Your firm depositis it profits of 28,000 inot the Third National Bank.
A. How much excess reserve does your deposit generate for the bank?
What is the maximum amount of new money that can be created in the banking system as a result of this deposit? Show all work
B. What is the federal funds rate in the banking system?
Explain how the fed manipulates this rate in order to achieve macroeonmic objectives?
6. Let the exchange rate be defined as the number of dollars per Japanese yen. Assume there is a increase in U.S interest ratres relative to that of Japan.
A. Would this event cause the demand for the dollar to increase or decrease relative to the demand for the yen? Why?
b.) Has the dollar appreciatred or depreciated in value relative to the yen?
c.) Does this change in the value of the dollar make imports cheaper or more expensive for Americans? Are American exports cheaper or more expensive for importers of U.S goods in Japan? Illustrate by showing the price of a U.S e reader in japan before and after the change in the exchange rate.

d.) If you had a business exporting good to japan, and u.s interest rate rose as they have in this example, would you plan to expand production or cut back? Why

1. A software producer has fixed cost of 20,000 per month and her total variable costs TVC as a function fo output Q are given below. Complete the table (TC, MC, TR, and MR)
Q TVC Price
2,000 5,000 25
4,000 7,000 22
6,000 18,000 20
8,000 33,000 10
10,000 50,000 1
A. If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic cometitive market whre the price of software at each possible quantity is also listed above? Why? (show work)

B. What should be the production level if fixed cost rose to 70,000 per month? Explain

1. A software producer has fixed cost of 20,000 per month and her total variable costs TVC as a function fo output Q are given below. Complete the table (TC, MC, TR, and MR)
Q TVC Price
2,000 5,000 25
4,000 7,000 22
6,000 18,000 20
8,000 33,000 10
10,000 50,000 1
A. If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic cometitive market whre the price of software at each possible quantity is also listed above? Why? (show work)
B. What should be the production level if fixed cost rose to 70,000 per month? Explain

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ECON-545-Business Economics_Final Exam