Managerial Economics 2012, Class 6, Midterm Test. Managerial Economics 2012, Class 6, Midterm Test - 1

Name ________________________________________ Date: October 19, 2012

Managerial Economics 2012, Class 6, Midterm Test - 1

1. Newspaper vending machines allow buyers to take more than one paper when the buyer pays for one copy while soft drink vending machines dispense just one can of soda at a time? Why? (2 points)

2. Sometimes when farmers produce too much milk the association of farmers decides to put the extra milk in the tanker and dump it into the sea. Why they prefer to waste this milk instead of selling it in the market and earning additional revenue? (2 points)

3. Nike's managers are considering expanding into producing sports beverages. Why might the company decide to do this under the Nike brand name? (2 points)

4. There are three firms (A, B and C) in the market who are engaged into sequential quantity competition. They know the market demand function and can predict the behavior of each other. A makes the first move, B makes the second move, and C acts the third. All firms have the same constant marginal cost. What will be there equilibrium? Explain the logic of finding the solution. (4 points)

Name ________________________________________ Date: October 19, 2012

Managerial Economics 2012, Class 6, Midterm Test

5. The European Association of Surgeons (EAS) holds the annual conference in the Paris. The conference is very useful for the development of professional skills of surgeons and lot of specialists across the country are willing to participate in the conference. The managers of the EAS conducted the survey of 100 randomly chosen Parisian surgeons and found that their demand for the conference is Q=100-0,1P (where P is conference fee, and Q is the number of surgeons from 100 who would like to participate at the conference). There are 2000 surgeons in Paris, 2000 surgeons in London and 2000 surgeons in Berlin. Their preferences are identical, however, there are travel costs from London to Paris – 200 euros, and from Berlin to Paris – 400 euros. Find the maximum revenue that may be earned by EAS with and without price discrimination. (6 points)

6. Provide marginal analysis of the choice of number of children a person prefers to have.
Explain shape of all functions you draw. (4 points)

Average man Average woman

Rich family-lover man Rich society lioness

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