# Final Exam Economics 3551 – Jack’s faces the following demand function

Economics 3551 Lynn

Paringer

Managerial Economics

Practice Final Exam

Questions 1 – 6

Jack’s faces the following demand function

for its Jack in the Boxes: Q = 13000 – 8P. Jack produces the Jack in the Boxes in two

facilities. The cost functions in each

facility are:

TC1 = 110,000 + 40Q1 + .09Q12

TC2 = 200,000 + 80Q2 + .05Q22

Calculate the Q at which average cost is a minimum in facility

1. What is minimum average cost?

Graph the average cost, marginal cost and average variable cost

functions for facility 1.

Calculate the profit maximizing amount of Q to make and the

profit maximizing price.

Calculate the amount of Q that will be made in each

facility.

Calculate the overall profits of the firm.

Calculate the marginal revenue at the profit maximizing amount

of Q.

Questions 7 – 11

Marion the monopolist faces the following

demand function: Q = 22,000 – 8P. She

faces the following cost function: TC = 5,000,000 + 140Q.

Calculate the price and quantity at which profits are a

maximum.

What are the maximum profits?

Graph the demand, marginal revenue, marginal cost and average

cost functions.

Shade in the area that represents the profits of the firm.

Now assume that regulators have decided to regulate Marion so that price

= average cost. What price and

quantity does this correspond to?

Questions 12 – 14

The demand for boobles can be written as: Q

= 11,000 – 8P.

Calculate the price, quantity, total revenue and marginal

revenue when the elasticity of demand = -2.2.

Calculate the price, quantity, total revenue and elasticity of

demand when MR = $60.

Calculate the price and quantity at which total revenue is a

maximum. What is maximum revenue?

Questions 15 – 19

Felicia has the following production

function: Q = 6K1/2L1/2.

She faces the following demand function: Q = 12,000 – 8P. The price per unit of K is $500 and the price

per unit of L is $2,500.

Calculate the amount of K and L that Felicia will use.

Calculate the profit maximizing amount of output and the profit

maximizing price.

Calculate the maximum profits of the firm.

Calculate the marginal revenue at the profit maximizing amount

of Q.

Calculate the marginal product of labor at the K and L in

question 15.

Questions 20 – 21

Reefer sells refrigerators to two classes

of consumers. The first class has the

less elastic demand. The second class is

known as the “rebaters”. They have a

higher elasticity of demand. Assume the

elasticity of demand of the first group is -1.9 and the elasticity of demand of

the second group is -2.2 and the marginal cost of a refrigerator is $500.

What price should Reefer set for the refrigerator?

What should the rebate be if Reefer wants to sell to both

classes of consumers?

Questions 22 –

25

Samson’s faces

the following production function: Q = 400L + 16L2 – .5L3.

Calculate the L at which Q is a maximum. What is the maximum Q?

Calculate the L at which the marginal product of L is a

maximum. What is the maximum

marginal product of L?

Calculate the L at which the average product of L is a

maximum. What is the maximum

average product of L?

Assume each unit of Q sells for $4 and each unit of L costs

$1,000. How much L should the firm

hire if it is to maximize profits?

What are its maximum profits?

Questions 26 – 29

Sam can sell all of the output he wants at

a price of $1000. He has the following

cost function:

TC

= 200,000 + 80Q + .08Q2

Calculate the profit maximizing quantity.

Calculate the maximum profits of the firm.

Graph the demand, marginal revenue, marginal cost and average

cost functions.

Shade in the area that represents the profits of the firm.

Questions 30 – 34

When P = 710, the demand for flugles is

4950. When P = 1150, the demand for

flugles = 2750.

Using these two points and assuming the demand for flugles is a

straight line, calculate and graph the demand function and the marginal

revenue function for flugles.

Now assume that the cost

function for flugles can be written as:

TC = 140,000 + 90Q + .07Q2

Graph the marginal cost and average cost

functions on the same graph that you just graphed demand and marginal revenue.

Calculate the profit

maximizing price and quantity of flugles and mark the points a (profit

maximizing quantity) and b (profit maximizing price) on your graph.

What is the average cost

at the profit maximizing quantity?

Mark this point on your graph and label it c. Shade in the area

that represents the profit of the firm.

Graph the total revenue and total cost functions and mark the

profit maximizing level of output on the graph.

Questions 35 – 38

Below is a graph of the marginal cost,

average cost, demand and marginal revenue functions of the Flooble firm. Fixed

costs are $180,000.

a=

b=

c=

d=

**30%**with the discount code: ESSAYHELP