Reference no: EM131357726
Managerial Economics
Midterm
This midterm exam consists of four questions. Please answer them using APA format.
Two to three pages should be sufficient for each question.
1. Antitrust authorities at the Federal Trade Commission are reviewing your company's recent merger with a rival firm. The FTC is concerned that the merger of two rival firms in the same market will increase market power. A hearing is scheduled for your company to present arguments that your firm has not increased its market power through this merger. Can you do this? How? What evidence might you bring to the hearing?
2. Assume that the demand for plastic surgery is price inelastic. Are the following statements true or false? Explain your answer for full credit.
o When the price of plastic surgery increases, the number of operations decreases.
o The percentage change in the price of plastic surgery is less than the percentage change in quantity demanded.
o Changes in the price of plastic surgery do not affect the number of operations.
o Quantity demanded is quite responsive to changes in price.
o The marginal revenue of another operation is negative.
3. The Theory of the Firm document, the Friedman article, and the information in chapter 4 argue that the main goal of a firm in a market economy is to maximize profit (shareholder wealth) over the long term. However, SEC regulations require U.S. corporations to publish operating results on a quarterly basis. How does this short term time frame impact long term profit maximization? Should the SEC change their regulations of public corporations to require only annual reporting of operations? How might this impact stock price in the short term? How do you believe that management deals with these two sometimes competing goals?
4. During the energy crisis of the 1970s, and again in the last 5 years, Congress bemoaned the "price gouging" and "windfall" profits of the major oil companies. In the 1970s Congress imposed an "excess profits tax" on these companies. It did not do so this time? What does this change show about how our understanding of the way the price system works to allocate resources has evolved? If "excess profits" are taxed away, where will oil companies get the money to fund new exploration and development of oil properties? Does it matter if these price increases are demand or supply induced?
Your paper should reflect scholarly writing and current APA standards. Please include citations to support your ideas.
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What was the harlem renaissance and why was it important
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Variance and covariance with the three assets
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Research a government policy implemented
: Referring to the 10-year historical period 1955-1965 discuss an example of a change in autonomous spending. Research a government policy implemented during that time and discuss the multiplier effect it had on the economy.
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Bertrand equilibrium in prices in market
: Consider a market with two horizontally differentiated firms, X and Y. Each has a constant marginal cost of $ 20. Demand functions are
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How might the impact stock price in the short term
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What adjustment might be useful for further improvement
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Important in oligopoly and monopoly markets
: "The only way to succeed in a market with homogeneous products is to produce more efficiently than most other firms." Comment. Does this imply that efficiency is less important in oligopoly and monopoly markets?
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Systematic relationship between concentration and price
: Numerous studies have shown that there is usually a systematic relationship between concentration and price. What is this relationship? Offer two brief explanations for this relationship.
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Identify your fixed and variable costs
: Identify your fixed and variable costs at your fast-food restaurant, and explain the changes to each of these costs given the increased demand.
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