Problem Set #4Managerial Economics Middleton

Managerial Economics


Problem Set #4

  • Chapter 5, problem #1
  • The cost function for a single product firm is C(Q) = 75 + 20Q + 25Q2 + 5Q3 Based on this information, determine:
    • Chapter 5, problem #5
    • Chapter 5, problem #13
    • A multiproduct firm’s cost function was recently estimated as:
      • Suppose the own price elasticity of market demand for beer steins is -1.5, the Rothschild index is .5, and the typical beer stein retailer enjoys sales of $70,000 annually.What is the price elasticity of demand for a representative beer stein retailer’s product?
      • Chapter 7, problem #9
      • A firm has 600,000 in sales, a Lerner index of .75, and a marginal cost of $25, and competes against 500 other firms in its relevant market.
        • What price does the firm charge its customers?
        • By what factor does this firm mark up its price over marginal cost?
        • Do you think this firm enjoys much market power?Explain.
      • Chapter 7, problem #15

      C(Q1,Q2) = 65 – .72(Q1Q2) + 5(Q1)2 + 2(Q2)2

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