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Mt445 Unit 3 Assignment

MT445 | Managerial Economics ] Unit 3 Assignment Student Name: Colleen Egan Please answer the following questions. Submit as a Microsoft Word® document to the Dropbox when completed. 1 . Is the price elasticity of demand for gasoline more elastic over a shorter or a longer period of time? Explain. The price of elasticity demand = the quantity change divided by the price change The price of elasticity demand for gas would be more elastic over a longer period of time because it would have a greater effect on the demand because as time goes on the demand would decrease. Price increases may reduce revenues, and decreases may increases revenues, but the increased price over a long period of time would ultimately decrease the supply. 2. Is the price elasticity of supply, in general, more elastic over a shorter or a longer period of time? Explain. The price of elasticity of supply is more elastic over a longer period of time. In a short period of time the supply does not really effect the price, but over a long period of time, companies can expand and then the quantity that can be provided also can be increased, which would affect the supply and price more. 3 . Why is the supply curve for labor usually upward sloping? An upward sloping supply curve means that the more that employees get paid the more they are willing to work (free time being the opportunity cost for them to make more money). 4. In the graph below, assume that the market demand curve for labor is initially

Unformatted text preview: [MT445 | Managerial Economics] Unit 5 Assignment Student Name: Please answer the following questions. Submit as a Microsoft Word® document to the Dropbox when completed. 1. How does the demand curve faced by a perfectly competitive firm differ from the market demand curve in a perfectly competitive market? Explain. The demand curve faced by a perfectly competitive firm differs from the market demand curve in a perfectly competitive market because the perfectly competitive market is downward sloping because of the goods and services produced, The line is horizontal in a market demand curve because the market value sets the price. A firm will lose profits if they set the price below the market price. It does not matter how much a firm sells or provides it will not be able to affect the market price. http://www.cliffsnotes.com/more-subjects/economics/perfect-competition/demand-in-a-perfectly-competitivemarket [MT445 | Managerial Economics] 2. A perfectly competitive firm has the following fixed and variable costs in the short run. The market price for the firm’s product is $140. Output 0 1 2 3 4 5 6 a. FC $90 90 90 90 90 90 90 VC $ 0 90 170 290 430 590 770 TC __90_ _180__ _260__ _380__ _520__ _680__ _860__ TR Profit/Loss _0__ -50___ _140__ -40___ _280__ 20___ 420___ 40___ 560___ 40___ 700___ 20___ 840___ -20___ Complete the table. b. What level of output should the firm produce to maximize profits? 4 c. Assume this firm is making a loss when it produces its 7 th unit of output. What should the firm do in the short-run? The firm should produce more in the short run then cut back on the output. 3. How does the profit maximization condition for a monopoly differ from that for a perfectly competitive firm? How does this difference impact efficiency under each market structure? A monopoly will produce less and charge more and a perfectly competitive industry will produce more and charge less. The difference is monopoly causes dead weight and they lose money because their prices are set to high. 4. The following table provides market share information about the soft-drink industry. Company Coca-Cola Pepsi-Co Cadbury Schweppers Other Market Share 37% 35 17 11 [MT445 | Managerial Economics] a. Do you think the Department of Justice and the Federal Trade Commission would approve a merger between any two of the first three companies listed? Explain. No because it will increase market power. b. Do you think this market has barriers to entry? If so, what might they be? No I do not think they have barrier to entry because there is numerous soda industries out there. Directions for Submitting your Assignment Complete your Assignment in this Microsoft Word® document and save it as Username-MT445AssignmentUnit#.doc (Example:TAllen-MT445Assignment-Unit5.doc). Submit your file by selecting the Unit 5: Assignment Dropbox by the end of Unit 5. Unit 5 Assignment Content and Analysis Points Possible Problem #1 How does the demand curve faced by a perfectly competitive firm differ from the market demand curve in a perfectly competitive market? Explain. 8 Problem #2 A perfectly competitive firm has the following fixed and variable costs in the short run. The market price for the firm’s product is $140. Complete the table (a) 7 What level of output should the firm produce to maximize profits? (b) 4 Assume this firm is making a loss when it produces its 7th unit of output. What should the firm do in the short-run? (c) 4 Problem #3 How does the profit maximization condition for a monopoly differ from that for a perfectly competitive firm? How does this difference impact efficiency under each market structure? 8 Problem #4 The following table provides market share information about the soft-drink industry. (a-b) 8 Writing Style, Grammar, and APA Format. 6 Total 45 Points Earned [MT445 | Managerial Economics] ...
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