Question 1

To open a new business,a manager must obtain a license from the city for $20,000.The license is transferable,but only $3,000 is refundable in the event the firm does not use the license.
a.What are the firm's fixed costs?
 Sunk costs?
b.Suppose the manager obtains a license but then decides against opening the business.If another firm offers the manager $2,000 for the license,should the manager accept the offer?

Accepted Answer

The answer of To open a new business,a manager must...

Question 2

You are the manager of a firm that sells output at a price of $40 per unit.You are interested in hiring a new worker who will increase your firm's output by 2,000 units per year.Several other firms also are interested in hiring this worker.
a.What is the highest annual salary you should be willing to pay this worker to come to your firm?
b.What will determine whether or not you actually have to offer this much to the worker to induce him to join your firm?

Accepted Answer

The answer of You are the manager of a firm...

Question 3

The management of Morris Industries is considering a plan to terminate a new employee.The action stemmed from documented evidence supplied by the firm's accounting department that this new employee did not add as much to the firm's overall output as did a worker hired two weeks earlier.Based on this evidence,do you agree that the latest worker hired should be fired?

Accepted Answer

The answer of The management of Morris Industries is considering...

Question 4

Show that the Cobb-Douglas production function $Q = K ^ { 1 / / 4 } L ^ { 3 } / 4$ exhibits the law of diminishing marginal rate of technical substitution.

Accepted Answer

The answer of Show that the Cobb-Douglas production function \(Q...

Question 5

The maker of Turbotax produces software that prepares federal income tax returns.In addition,it produces software that prepares various state income tax returns.Why doesn't it pay for the firm to specialize in federal software?

Accepted Answer

The answer of The maker of Turbotax produces software that...

Question 6

In 1995 the U.S.Justice Department sued to block a merger between Microsoft and Intuit,the producer of the nation's best-selling business software.The Justice Department argued that the merger would lessen competition and raise prices of business software.Is there an economic argument that the merger might actually result in lower prices?

Accepted Answer

The answer of In 1995 the U.S.Justice Department sued to...

Quiz 5: The Production Process and Costs

Show that the Cobb-Douglas production function Q=K1//4L3/4Q = K ^ { 1 / / 4 } L ^ { 3 } / 4Q=K1//4L3/4 exhibits the law of diminishing marginal rate of technical substitution.

The maker of Turbotax produces software that prepares federal income tax returns.In addition,it produces software that prepares various state income tax returns.Why doesn't it pay for the firm to specialize in federal software?

Show that the Cobb-Douglas production function $Q = K ^ { 1 / / 4 } L ^ { 3 } / 4$ exhibits the law of diminishing marginal rate of technical substitution.