Are business managers microeconomic or macroeconomic market participants?
Final Exam Covering Modules 1 – 8
Directions:
Include a copy of the question with each of your answers. For the problem-solving questions, show your work, to receive partial credit. If you use one or more sources of information in preparing any answer, provide an APA-style reference, identify any quoted information, and cite a reference wherever it is used.
1.
(a) Are business managers microeconomic or macroeconomic market participants? Explain.
(b) Do most business managers have the market power to significantly change market conditions? Explain.
(c) Provide an example of a microeconomic event that would affect firms.
(d) Provide an example of a macroeconomic event that would affect firms.
(e) Explain how a microeconomic view of international trade differs from a macroeconomic view of international trade.
2.
(a) Is it economically fair (i.e., ethical) to buy low and sell high, globally?
(b) Provide an example of a business efficiently using this economic principle.
3. Problem-solving question: Use the following data for a firm’s output at various levels of employment (L) to calculate:
(a) its marginal physical product of labor (MPPL) schedule;
(b) its (MPPL/(divided by) MRCL) schedule, given a fixed wage (W = MRCL) of $20 per hour per worker.
(c) Assuming that capital (K) is held constant at 4 machines and MPPK/(divided by) MRCK = 2, what is the least-cost input-combination of labor and capital and how much output is produced with that set of resources?
Number of Workers(L) Output(Q)
1 50
2 120
3 200
4 260
5 300
6 330
4.
Problem-solving question: Use the following data on a firm’s total cost schedules to calculate its average variable cost, average fixed cost, average total cost, and marginal cost schedules.
Output Total Cost Total Variable Cost Total Fixed Cost
1 $2040.00 $40.00 $2000.00
2 2070.00 70.00 2000.00
3 2090.00 90.00 2000.00
4 2160.00 160.00 2000.00
5 2275.00 275.00 2000.00
5.
Problem-solving exercises:
(a) Use the arc-approximation formula to calculate the price-elasticity of demand coefficient of a firm’s product demand between the (quantity, price) points of (12, $20) and (18, $16).
(b) Calculate the cross-price elasticity of demand coefficient of a firm’s product X, given that a 10% increase in the price of its close substitute, product Y, causes the quantity demand of product X to increase by 6%.
(c) Calculate the income-elasticity of demand coefficient for a product for which a 5% increase in consumers’ income will increase the quantity demanded by 4%.
6.
(a) Provide an example of where inter-industry competition is an important source of competition for a firm.
(b) Provide an example of where foreign competition is an important source of competition for a firm.
(c) Provide an example of where contestable markets competition is an important source of competition for a firm.
(d) Explain why an increase in competition usually helps improve market conditions in the U.S. economy.
(e) Does the U.S. government have a responsibility to maintain competitive markets? Explain.
7.
(a) Among the four types of unemployment, identify the economically best type and explain why it’s the best.
(b) Identify the economically most costly type of unemployment and explain why it’s the most costly.
(c) What type of unemployment are workers most likely to experience after they have earned an MBA degree? Explain.
8.
(a) Is it good for the U.S. economy that the U.S. supply of money is controlled by the Federal Reserve? Explain.
(b) Identify a banking service, and explain how it helps businesses and the U.S. economy.
(c) Would an increase in U.S. government regulation of banking help the U.S. economy? Briefly discuss.
9.
(a) Why do most countries have some protectionist trade barriers?
(b) Identify two types of protectionist trade barriers.
(c) Which is usually better for most countries, protectionist trade policies or free trade? Explain.
(d) For most countries would a fair trade policy usually be the same as a free trade policy? Explain.
(e) Which is better for a country economically, a multilateral free trade agreement including most countries, such as the WTO, or a regional trade agreement with one’s neighboring countries, such as NAFTA? Explain.
The end.
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