To answer: Why good decision making depend upon accurately defining costs and benefits Concept Introduction: Marginal cost: Marginal cost is the additional cost made to the total cost in the production of an additional unit of the commodity Marginal benefit: The marginal benefit is the additional benefit resulted from producing the additional unit of a good or service. Marginal Analysis: Marginal analysis is used to compare the benefits and cost derives out of a specific action. The marginal changes refers to the small incremental adjustment to a plan of action

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Answer 1

Question

Chapter 9, Problem aWYWL

To determine

To answer:

Why good decision making depend upon accurately defining costs and benefits

Concept Introduction:

Marginal cost: Marginal cost is the additional cost made to the total cost in the production of an additional unit of the commodity

Marginal benefit: The marginal benefit is the additional benefit resulted from producing the additional unit of a good or service.

Marginal Analysis: Marginal analysis is used to compare the benefits and cost derives out of a specific action. The marginal changes refers to the small incremental adjustment to a plan of action

Expert Solution & Answer

Explanation of Solution

The good decision making depend upon the costs and benefits of the given activity to be more specific we can say that it depends upon the marginal cost and marginal benefits. The decision making used by marginal cost and benefit called marginal analysis. For an example the marginal cost of a given activity outweighs it marginal benefit then people should avoid that activity. The famous economist Gregory Mankiw wrote in his book that ‘the rational people always look at the margin’. So a consumer will consume a particular good until his or her marginal benefit is equal to the marginal cost. When we take the case of production is only benefited when the marginal benefit is greater than the marginal cost, when this happens the producer will have to produce more. When the marginal cost of production outweighs the marginal benefit here the producer should try to decrease the production. So it is always important to consider marginal cost and marginal benefit when making the decision. The rational people always look at the margin

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Problem 3 You are given the following demand for European luxury automobiles: Q=1,000 P-0.5.2/1.6 where P-Price of European luxury cars PA = Price of American luxury cars P, Price of Japanese luxury cars I= Annual income of car buyers Assume that each of the coefficients is statistically significant (i.e., that they passed the t-test). On the basis of the information given, answer the following questions 1. Comment on the degree of substitutability between European and American luxury cars and between European and Japanese luxury cars. Explain some possible reasons for the results in the equation. 2. Comment on the coefficient for the income variable. Is this result what you would expect? Explain. 3. Comment on the coefficient of the European car price variable. Is that what you would expect? Explain.

Problem 2: A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q=+15,000-2.80P+150A+0.3P+0.35Pm+0.2Pc (5,234) (1.29) (175) (0.12) (0.17) (0.13) R²=0.68 SER 786 F=21.25 The variables and their assumed values are P = Price of basic model = 7,000 Q==Quantity A = Advertising expenditures (in thousands) = 52 P = Average price of a personal computer = 4,000 P. Average price of a minicomputer = 15,000 Pe Average price of a leading competitor's workstation = 8,000 1. Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing and pricing policies? 2. Conduct a t-test for the statistical significance of each variable. In each case, state whether a one-tail or two-tail test is required. What difference, if any, does it make to…

Answer 2

Question

Chapter 9, Problem aWYWL

To determine

To answer:

Why good decision making depend upon accurately defining costs and benefits

Concept Introduction:

Marginal cost: Marginal cost is the additional cost made to the total cost in the production of an additional unit of the commodity

Marginal benefit: The marginal benefit is the additional benefit resulted from producing the additional unit of a good or service.

Marginal Analysis: Marginal analysis is used to compare the benefits and cost derives out of a specific action. The marginal changes refers to the small incremental adjustment to a plan of action

Expert Solution & Answer

Explanation of Solution

The good decision making depend upon the costs and benefits of the given activity to be more specific we can say that it depends upon the marginal cost and marginal benefits. The decision making used by marginal cost and benefit called marginal analysis. For an example the marginal cost of a given activity outweighs it marginal benefit then people should avoid that activity. The famous economist Gregory Mankiw wrote in his book that ‘the rational people always look at the margin’. So a consumer will consume a particular good until his or her marginal benefit is equal to the marginal cost. When we take the case of production is only benefited when the marginal benefit is greater than the marginal cost, when this happens the producer will have to produce more. When the marginal cost of production outweighs the marginal benefit here the producer should try to decrease the production. So it is always important to consider marginal cost and marginal benefit when making the decision. The rational people always look at the margin

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Answer 3

Question

Chapter 9, Problem aWYWL

To determine

To answer:

Why good decision making depend upon accurately defining costs and benefits

Concept Introduction:

Marginal cost: Marginal cost is the additional cost made to the total cost in the production of an additional unit of the commodity

Marginal benefit: The marginal benefit is the additional benefit resulted from producing the additional unit of a good or service.

Marginal Analysis: Marginal analysis is used to compare the benefits and cost derives out of a specific action. The marginal changes refers to the small incremental adjustment to a plan of action

Expert Solution & Answer

Explanation of Solution

The good decision making depend upon the costs and benefits of the given activity to be more specific we can say that it depends upon the marginal cost and marginal benefits. The decision making used by marginal cost and benefit called marginal analysis. For an example the marginal cost of a given activity outweighs it marginal benefit then people should avoid that activity. The famous economist Gregory Mankiw wrote in his book that ‘the rational people always look at the margin’. So a consumer will consume a particular good until his or her marginal benefit is equal to the marginal cost. When we take the case of production is only benefited when the marginal benefit is greater than the marginal cost, when this happens the producer will have to produce more. When the marginal cost of production outweighs the marginal benefit here the producer should try to decrease the production. So it is always important to consider marginal cost and marginal benefit when making the decision. The rational people always look at the margin

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Answer 4

Question

Chapter 9, Problem aWYWL

To determine

To answer:

Why good decision making depend upon accurately defining costs and benefits

Concept Introduction:

Marginal cost: Marginal cost is the additional cost made to the total cost in the production of an additional unit of the commodity

Marginal benefit: The marginal benefit is the additional benefit resulted from producing the additional unit of a good or service.

Marginal Analysis: Marginal analysis is used to compare the benefits and cost derives out of a specific action. The marginal changes refers to the small incremental adjustment to a plan of action

Expert Solution & Answer

Explanation of Solution

The good decision making depend upon the costs and benefits of the given activity to be more specific we can say that it depends upon the marginal cost and marginal benefits. The decision making used by marginal cost and benefit called marginal analysis. For an example the marginal cost of a given activity outweighs it marginal benefit then people should avoid that activity. The famous economist Gregory Mankiw wrote in his book that ‘the rational people always look at the margin’. So a consumer will consume a particular good until his or her marginal benefit is equal to the marginal cost. When we take the case of production is only benefited when the marginal benefit is greater than the marginal cost, when this happens the producer will have to produce more. When the marginal cost of production outweighs the marginal benefit here the producer should try to decrease the production. So it is always important to consider marginal cost and marginal benefit when making the decision. The rational people always look at the margin

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Answer 5

Chapter 9, Problem aWYWL

To determine

To answer:

Why good decision making depend upon accurately defining costs and benefits

Concept Introduction:

Marginal cost: Marginal cost is the additional cost made to the total cost in the production of an additional unit of the commodity

Marginal benefit: The marginal benefit is the additional benefit resulted from producing the additional unit of a good or service.

Marginal Analysis: Marginal analysis is used to compare the benefits and cost derives out of a specific action. The marginal changes refers to the small incremental adjustment to a plan of action

Expert Solution & Answer

Explanation of Solution

The good decision making depend upon the costs and benefits of the given activity to be more specific we can say that it depends upon the marginal cost and marginal benefits. The decision making used by marginal cost and benefit called marginal analysis. For an example the marginal cost of a given activity outweighs it marginal benefit then people should avoid that activity. The famous economist Gregory Mankiw wrote in his book that ‘the rational people always look at the margin’. So a consumer will consume a particular good until his or her marginal benefit is equal to the marginal cost. When we take the case of production is only benefited when the marginal benefit is greater than the marginal cost, when this happens the producer will have to produce more. When the marginal cost of production outweighs the marginal benefit here the producer should try to decrease the production. So it is always important to consider marginal cost and marginal benefit when making the decision. The rational people always look at the margin

Answer 6

Chapter 9, Problem aWYWL

To determine

To answer:

Why good decision making depend upon accurately defining costs and benefits

Concept Introduction:

Marginal cost: Marginal cost is the additional cost made to the total cost in the production of an additional unit of the commodity

Marginal benefit: The marginal benefit is the additional benefit resulted from producing the additional unit of a good or service.

Marginal Analysis: Marginal analysis is used to compare the benefits and cost derives out of a specific action. The marginal changes refers to the small incremental adjustment to a plan of action

Expert Solution & Answer

Explanation of Solution

The good decision making depend upon the costs and benefits of the given activity to be more specific we can say that it depends upon the marginal cost and marginal benefits. The decision making used by marginal cost and benefit called marginal analysis. For an example the marginal cost of a given activity outweighs it marginal benefit then people should avoid that activity. The famous economist Gregory Mankiw wrote in his book that ‘the rational people always look at the margin’. So a consumer will consume a particular good until his or her marginal benefit is equal to the marginal cost. When we take the case of production is only benefited when the marginal benefit is greater than the marginal cost, when this happens the producer will have to produce more. When the marginal cost of production outweighs the marginal benefit here the producer should try to decrease the production. So it is always important to consider marginal cost and marginal benefit when making the decision. The rational people always look at the margin

Answer 7

Chapter 9, Problem aWYWL

To determine

To answer:

Why good decision making depend upon accurately defining costs and benefits

Concept Introduction:

Marginal cost: Marginal cost is the additional cost made to the total cost in the production of an additional unit of the commodity

Marginal benefit: The marginal benefit is the additional benefit resulted from producing the additional unit of a good or service.

Marginal Analysis: Marginal analysis is used to compare the benefits and cost derives out of a specific action. The marginal changes refers to the small incremental adjustment to a plan of action

Answer 8

Expert Solution & Answer

Explanation of Solution

The good decision making depend upon the costs and benefits of the given activity to be more specific we can say that it depends upon the marginal cost and marginal benefits. The decision making used by marginal cost and benefit called marginal analysis. For an example the marginal cost of a given activity outweighs it marginal benefit then people should avoid that activity. The famous economist Gregory Mankiw wrote in his book that ‘the rational people always look at the margin’. So a consumer will consume a particular good until his or her marginal benefit is equal to the marginal cost. When we take the case of production is only benefited when the marginal benefit is greater than the marginal cost, when this happens the producer will have to produce more. When the marginal cost of production outweighs the marginal benefit here the producer should try to decrease the production. So it is always important to consider marginal cost and marginal benefit when making the decision. The rational people always look at the margin

Answer 9

Expert Solution & Answer

Answer 10

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Answer 11

Ch. 9 - Prob. aWYWL Ch. 9 - Prob. bWYWL Ch. 9 - Prob. cWYWL Ch. 9 - Prob. dWYWL Ch. 9 - Prob. eWYWL Ch. 9 - Prob. fWYWL Ch. 9 - Prob. 1QFT Ch. 9 - Prob. 2QFT Ch. 9 - Prob. 3QFT Ch. 9 - Prob. 1P

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Chapter 9 Solutions