Reference no: EM132218880

Question one

You are the manager of a Fortune 500 hotel chain and must decide where to locate a new Hotel. Based on tax considerations, your accounting department suggests that Atlantic City are the best choice, followed closely by Las Vegas. In particular, your current year tax from locating in Atlantic City are $4 million but only $3 million in Las Vegas. Your marketing department, on the other hand, has provided you with sales estimates that suggest that the present value of the gross (of taxes) operating profits from locating in Atlantic City are only $10 million but are $14 million for Las Vegas. It will cost $14 million to build the hotel in either location. Ignoring all other considerations. Where should you build the hotel? What are your firm's economic profits if you locate the hotel in Atlantic City?

Question two

An accountant for a car rental company was recently asked to report the firm's costs of producing various levels of output. The accountant knows that the most recent estimate available of the firm's cost function is C(Q) = 100 + 10Q + Q2 where costs are measured in thousands of dollars and output is measured in thousands of hours rented.

a. What is the average fixed cost of producing 2 units of output?
b. What is the average variable cost of producing 2 units of output?
c. What is the average total cost of producing 2 units of output?
d. What is the marginal cost of producing 2 units of output?
e. What is the relation between the answers to (a). (b). and (c) above? Is this a general property of average cost curves?

Question three

You are the manager of a firm that plans to expand the human resource base of its operation by hiring additional business school graduates over the next few years. You recently read an article in The Wall Street Journal that reports that enrollments in business schools have declined as students are moving into the "hard sciences " That same article reports that the shakeup of upper-management Is over at U.S. firms, and that over the next decade there will be a nationwide surge in the demand for MBA's How will these events affect your firm's ability to expand is own base of MBA's?

Question four
You are the manager of Fast & Easy Donuts, Almost all of your donut sales are derived from the drive-through window. You know from experience that coffee is a complement for your donuts. The morning newspaper says that a major storm has just destroyed percent of this year's coffee bean crop. Will this affect how much flour you order? Will it affect how many employees you schedule? What will happen to prices?

Question five
You work for an unemployment agency that distributes unemployment checks to unemployed workers in your state. Your boss recently learned that the President proposed a 21 percent increase in the minimum wage, and wants you to provide her with an estimate of the number of additional workers who will file for unemployment compensation claims next year if the bill passes. Based on library research at a nearby university, you learn that about 200,000 workers in your state earn at or below the current minimum wage. Further library research turns up a study that reports the own price elasticity of demand for minimum wage earners to be -0.30. Based on your findings, how many additional workers do you think will file unemployment claims in your state?

Note: Question one is compulsory and choose any other 2 questions