Esaay on Managerial Economics
economics
Description
MANAGERIAL ECONOMICS - ESSAY TAKE-HOME TEST
Write concise essay answers in response to the following questions:
MICROECONOMICS CHAPTERS 1-18
1. Using the concept of elasticity, show that a drug enforcement policy aimed at
getting rid of suppliers of
heroin may not be very effective in reducing heroin consumption.
2. State the law of diminishing marginal utility and give a real-life example of
it.
3. Explain the difference between diminishing returns and diseconomies of
scale. What are the causes of
each?
4. Suppose a perfectly competitive, increasing-cost industry is initially in long-
run equilibrium and
demand suddenly increases. Explain how the demand change affects price and
quantity and who
benefits from the increased demand.
5. Explain the existence of natural monopolies such as regional electric
companies. What are the benefits
and costs of allowing such firms to remain monopolies?
6. Explain why cartels are naturally unstable. Do these factors explain the
decline of OPEC as an
international cartel?
7. Explain why unskilled workers earn little economic rent, while much of a
NFL quarterback's salary is
rent.
8. Explain why a reduction in welfare benefits for the poor and a tax increase on
the wealthy would have
different effects on work effort.
