MICROECONOMICS CUSTOM SMC >BI<
21st Edition
ISBN: 9781307055320
Author: McConnell
Publisher: MCG/CREATE
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 7RQ
To determine
The form of business.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Complete the accompanying table and answer the accompanying questions. (L01, LO6, LO7)
a. At what level of the control variable are net benefits maximized?
b. What is the relation between marginal benefit and marginal cost at this levelof the variable?
Control Variable Q
Total Benefits B(Q)
Total Cost C(Q)
Net Benefits N(Q)
Marginal Benefit MB(Q)
Marginal Cost MC(Q)
Marginal Cost MC(Q)
100
1200
950
60
101
1400
70
102
1590
80
103
1770
90
104
1940
100
105
2100
110
106
2250
120
107
2390
130
108
2520
140
109
2640
150
110
2750
160
Teletronics reported record profits of $100,000 last year and is on track to exceed those profits this year. Teletronics competes in a very competitive market where many of the firms are merging in an attempt to gain competitive advantages. Currently, the company’s top manager is compensated with a fixed salary that does not include any performance bonuses. Explain why this manager might nonetheless have a strong incentive to maximize the firm’s profits. (LO4, LO5)
Abdul’s utility function is given by U A 5 M A 2 y M B , where M A is Abdul’s wealth level and M B is Benjamin’s wealth level. Benjamin’s utility function is given by (LO1) U B 5 M B 2 y M A . Suppose M A 5 M B 5 10 initially, and suppose there is a joint project that Ab dul and Benjamin can undertake that will generate an additional 10 units of wealth to divide between them. The project is neither pleasant nor unpleasant. What is the minimum payment Abdul must be given to secure his agreement to perform the project? What is the minimum payment Benjamin must be given? Will they perform the project? (LO1)
Chapter 2 Solutions
MICROECONOMICS CUSTOM SMC >BI<
Ch. 2.2 - Prob. 1QQCh. 2.2 - Prob. 2QQCh. 2.2 - Prob. 3QQCh. 2.2 - Prob. 4QQCh. 2 - Prob. 1DQCh. 2 - Prob. 2DQCh. 2 - Prob. 3DQCh. 2 - Prob. 4DQCh. 2 - Prob. 5DQCh. 2 - Prob. 6DQ
Ch. 2 - Prob. 7DQCh. 2 - Prob. 8DQCh. 2 - Prob. 9DQCh. 2 - Prob. 10DQCh. 2 - Prob. 11DQCh. 2 - Prob. 12DQCh. 2 - Prob. 13DQCh. 2 - Prob. 1RQCh. 2 - Prob. 2RQCh. 2 - Prob. 3RQCh. 2 - Prob. 4RQCh. 2 - Prob. 5RQCh. 2 - Prob. 6RQCh. 2 - Prob. 7RQCh. 2 - Prob. 8RQCh. 2 - Prob. 1PCh. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4P
Knowledge Booster
Similar questions
- Newfoundland’s fishing industry has recently declined sharply due to overfish- ing, even though fishing companies were supposedly bound by a quota agree- ment. If all fishermen had abided by the agreement, yields could have been maintained at high levels. LO4 Model this situation as a prisoner’s dilemma in which the players are Company A and Company B and the strategies are to keep the quota and break the quota. Include appropriate payoffs in the matrix. Explain why overfishing is inevitable in the absence of effective enforcement of the quota agreement. Provide another environmental example of a prisoner’s dilemma. In many potential prisoner’s dilemmas, a way out of the dilemma for a would-be cooperator is to make reliable character judgments about the trustworthiness of potential partners. Explain why this solution is not avail- able in many situations involving degradation of the environment.arrow_forwardSuppose the marginal benefit of writing a contract is $100, independent of its length. Find the optimal contract length when the marginal cost of writing a contract of length L is: (LO3) a. MC(L) = 30 + 4L. b. MC(L) = 40 + 5L. c. What happens to the optimal contract length when the marginal cost of writing a contract declines?arrow_forwardWith current technology, suppose a firm is producing 400 loaves of banana bread daily. Also, assume that the least-cost combination of resources in producing those loaves is 5 units of labor, 7 units of land, 2 units of capital, and 1 unit of entrepreneurial ability, selling at prices of $40, $60, $60, and $20, respectively. If the firm can sell these 400 loaves at $2 per unit, will it continue to produce banana bread? If this firm’s situation is typical for the other makers of banana bread, will resources flow to or away from this bakery good?arrow_forward
- Approximately how many people are employed in the federal bureaucracy? O 1 million-1.4 million O 1.5 million -1.7 million O2 million-2.4 million O 2.5 million - 3 millionarrow_forwardSuppose a two-person household. Person 1 has h1 units of time available and takes l1 units of leisure time, and person 2 has h2 units of time available and takes l2 units of leisure time. Collectively, the two persons in the household care about their total consumption c, and their total leisure l=l1+l2, and they have preferences over their total consumption and total leisure just as specified in the course. But person 1 faces a market wage w1, and person 2 faces a market wage w2, with w1 > w2. 1) Draw the budget constraint faced by the two-person household. What will the household do, that is, how much does each household member work? 2) What happens if w2 rises? (w1 > w2 still holds) 3) Explain your results and interpretarrow_forwardAs one of the largest and fastest-growing industries in 2018, health care provided how many jobs for wage and salary workers? O 18 million 30 million 3 pts O 24 million O 12 millionarrow_forward
- Suppose we have another firm known as the Sanda Corporation which makes a product known as "Delgados". Suppose that its FC=$2,000 and its TC=$5,000 and its AVC=$48. What is the ATC? O $20.50 O $70 O $80 O $100 O Not enough informationarrow_forwardWhat do we mean by “economic activity”?Economic Activity we mean the area of our social interactions in which people provide for their material needs and for those of their fellow human beings. It involves the production, the distribution, and the consumption of goods and services. #164. What does the Bible say about poverty and riches?Anyone who follows Jesus must never forget that first and foremost we are supposed to be ‘rich toward God’ (Lk.12:21). To become rich in material things is not a particularly Christian goal in life. And to be materially rich is not a sure sign of God’s special grace. Jesus teaches us to pray: ‘Give us this day our daily bread’ (Mt.6:11). With these words we ask the Father for all that we need for our earthly life. We do not strive for luxurious possessions but for the goods required for a happy life in moderate prosperity, the support of a family, works and charity, and participation in culture and education, as well as further development. #175. Is…arrow_forward(Last Word) The combined cost of Social Security and Medicare programs was what percent of U.S. GDP in 2008 (A) 7.6 (B) 12.4 (C) 17.2 (D) 2.9arrow_forward
- 3. Consider a Factory town model. Draw a market area graph for a single factory (hint: similar to figure 2-1) with a shirt cost at the factory of 0.5 bread and a shirt cost at home of 1 bread. Now, suppose that gluten-addicted aliens have invaded our factory town, and with a small probability, will abduct people walking to the factory and steal half of their bread. This makes traveling to the factory more costly on average. What will this do to the overall size of the factory town? Copy your graph from before, but this time add the change to the graph.arrow_forwardWithin its first three years, the 2012 Chevy Volt fell in value 62 percent to $12,997 in 2015. And a 2012 Nissan Leaf fell in value 66 percent to $10,220. That’s −22 percent a year, whereas the typical gasoline car depreciates −24, −15, and −12 percent its first three years (51 percent) for a −17 percent average per year. Indeed, at the extreme, a Honda Accord is worth fully 64 percent after three years (−12 percent average per year). Clearly, the steep decline in gasoline prices in 2014 contributed to electric-powered vehicles depreciating recently much faster than gasoline powered vehicles. But hybrid-electric vehicles such as the Nissan Leaf and Chevy Volt and all-electric vehicles such as the Chevy Bolt face another problem as well? 1.) What life cycle cost concept begins raising concerns by year 5 with any electric vehicle (EV)? If that issue affected resale value at year 5, would that affect perceived value-in-use? How exactly?arrow_forwardThe price of a gallon of gasoline in California was $0.99 in 1997, and it is currently $3.69. By what factor have the prices increased? -3.73 O 72 O 27 3.73arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you