Managerial Eco: Hw1(Answer)

MANAGERIAL ECONOMICS SEEG 5013 Homework: 1 (Brief Answers) 1. p. 23, Exercise No. 1, resultant role: The dynamic equilibrium possibility of profit suggests that at whatever time an individual firm or industry may earn a return above or on a lower floor the long-run normal rate of profit for that industry, because of temporary dislocations (shocks) in the economy. The dough earned by anoint companies in the inflame of the Kuwait/Iraq war fit this definition. Proposals to tax away these profits would eliminate the symmetry in these shocks by making the oil companies give up periods of high profits but prevail the cost of periods of below normal profits. These periods of high profits dexterity also be justified in the context of the risk-bearing system of profit. 2. p. 23, Exercise No. 3, ANSWER: High profits in the drug industry can be explained by the risk-bearing theory of profit, the modern theory of profit, and the monopoly theory of profit. Patents granted for the R&D of drugs, which are the product of a firms innovative efforts (and perhaps its managerial efficiency), provide the developing firm with a monopoly position in the production and marketing of that drug. 3.

Shareholder wealth-maximizing pretense: ANSWER: (a) Prices may move to a more militant (lower) level, reducing the firms expected cash course stream and, hence its nurture. (b) If these requirements are imposed equally on all firms, some of the cost burden will be borne by the firm and some by consumers, depending on the reputation of the demand function (elasticity). If the impact of the requirements is substantially different from unmatchable firm to another in an industry, the value of some firms may be enhanced relative to those at a competitive disadvantage because of the standards. (c) Labor costs may or may not increase. To the extent they increase without an offsetting increase in productivity, the value of the firm would be reduced. (d) The impact is indeterminate depending on the business leader of... If you want to get a full essay, order it on our website: Orderessay

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