Economics of Enterprise Answers

1. suppose you are a monopolist and find that the demand elasticity of your product is different in two markets what would be your pricing strategy

Fill in the gaps in the table below 

QuantityofVariableinputTotalOutputMarginalProductofVariableinputAverageProduut

 0 0

1 225

2 300

3 300

4 1140

5 225

6 225

Does positive value of x make economic sense and what is underlying economic theory

I. True/False/Uncertain - Briefly explain

1. GMSE is bigger with more Xs than the true model than with less Xs.

2. If the exit criterion sls in automatic search is elevated, then the model ends up with less Xs in it.

3. If βˆ = 0.01 in a logit model, then for each unit increase in X, the probability that Y=1 is on average higher by 1%, ceteris paribus.

4. A model with 98% correct classification rate is a useful model.

5. With the cumulative logit, the probability to be in the second highest category K-1 or higher is pK−1 = FK−1 − 1.

6. If the p-value=0.06 of testing Poisson vs. Negative Binomial model with the χ 2 1 distribution, one should use the Poisson model.

7. With all observations in the same cluster, RSQ = 1.

8. With 500 multiple imputation samples generating 500 predictions of 0 or 1 for the binary dependent variable for each observation, to combine the 500 predictions into one for each observation, one has to take the mean of all 500 predictions and use a cutoff of 50%.

Suppose you are a monopolist and find that the demand elasticity of your product is different in two markets. What would be your pricing strategy?

different between scarcity and shortage

Does a change in consumers’ tastes lead to a movement along the demand curve or to a shift in the demand curve?

1. If a company sets aside $1,000,000 now into a contingency fund, how much will the company have in 2 years, if it does not use any of the money and the account grows at a rate of 10% per year?

The total cost function of a monopolistic producer of two goods is TC = 3x + xy + 4y, where x and y denote the number of units of good 1 and good 2, respectively.

If p₁ and p₂ denote the corresponding prices, then the demand function of each good is p₁ = 60 − x + y and p₂ = 40 + 2x − y. Find the maximum profit if the firm is contracted to produce a total of 200 goods.

A) x = 198.250, y = 201.750 ; B) x = 255.500, y = 244.500;

C) x = 102.625, y = 97.375 ; D) x = 56.750, y = 43.250 [0.6 points]

Estimate the change in the optimal profit if the production quota rises by one unit.

Fill in the gaps in the table below 
Quantity of Variable input TotalOutput	Marginal Product ofVariable input
	Average Product ofVariable input

0	0 
1	225  
2 300
3 300	
4	1140 
5 225	
6 225