Mid Term Sample Questions

Assume that the manufacturers of this product lobby the government’s lawmakers, in terms of this product being essential for college students but they are considering halting production due to the lack of profits. The lawmaker’s agree and now set a price floor at $150. What would happen in this market?

3. Geoff has a written agreement with Huck. To accomplish the objectives of this relationship, Geoff's authority can

2. Total revenue falls as the price of a good is raised, if the demand for the good is ( )

26. According to the figure below, this firm would shut down in the long run if:

availability of substitutes, and justify how you determine the price elasticity of demand for your firm’s product. b) Explain the factors that affect consumer responsiveness to price changes for this product, using the concept of price

d) The economy will spend too much time cutting and loses the ability to produce enough pie for everyone.

[D] The demand for coffee will decrease, and the quantity demanded of tea will increase.

Suggest key actions that management should take in order to confront these circumstances. Provide a rationale for your response. (Hint: Your firm’s price must cover average variable costs in the short run and average total costs in the long run to continue operations.)

What is the effect on the equilibrium price and equilibrium quantity of orange juice if the price of apple juice decreases and the wage rate paid to orange grove workers increases?

5. Should the company seriously consider any other options besides doing a spin-off or issuing targeted stock?

2. The quantity of peanuts supplied increased from 40 tons per week to 60 tons per week when the price of peanuts increased from $4 per ton to
$5 per ton. The price elasticity of supply for peanuts over this price range is

d. Does the firm appear to have an effective corporate governance structure? Explain any shortcomings.

b. The company may be able to avoid bankruptcy but it will be hard. They will need to do several things.

b) Suppose price is held constant at the value from part (a). What will happen to the quantity demanded if due to PVRs the number of expected viewers falls to 0.5 million? Calculate the “viewer elasticity” based on the two points. Explain in words what this value means.

The product my business has chose to produce is water bottles. After some research it can be said that the typical production cost of one water bottle unit is $20. Total fixed costs for my company including rent and utilities are $4000 per month. Given these numbers a linear cost function for my product can be constructed; C(x) = 20x + 4000. In this equation x represents water bottles produced each month at a price of $20 along with $4000 of total fixed costs. An estimated total cost per month can then be determined of $120,000 looking at what the company can afford. Using the cost function C(x), we can plug in 120,000 to then determine the number of water bottles produced each month, which will be x. The beginning equation is C(120000) = 20x + 4000, begin by subtracting 4000 from each side leaving us with 116000 = 20x then divide both sides of the equation by 20 to get a final answer of x = 5800. This is the number of bottles produced each month.