Managerial Economics

Additional problems for chapter 8

1. Suppose the typical firm in a perfectly competitive industry has the following long-run total cost function:

What is the long-run price for product Q?

2. Stanley Smith has a soft drink concession monopoly at Fort Tippecanoe, Indiana, County Fair. He believes his total cost for supplying the drinks will be

If the County Fair Board tells him he must charge $0.80 and demand for the drinks during the fair is given by the demand curve

determine the following:

(a) The number of drinks sold and Stanley’s total profit at the fixed price of $0.80 per drink.

(b) Stanley’s profit-maximizing output, price, and profit if he were allowed to set his own price instead of having to charge $0.80.

Final Paper Focus of the Final Paper Write a five-to seven-page financial statement analysis of a public company, formatted according to APA style as outlined in the Ashford Writing Center.   In this analysis, you will discuss the financial health of this company with the ultimate goal of making a recommendation to other investors.   Your paper should consist of the following sections: introduction, company overview, horizontal analysis, ratio analysis, final recommendation, and conclusions.   Here is a breakdown of the sections within the body of the assignment:   Company Overview Provide a brief overview of your company (one to two paragraphs at most).   What industry is it in?   What are its main products or services?  Who are its competitors?   Horizontal Analysis of Income Statement and Balance Sheet Prepare a three-year horizontal analysis of the income statement and balance sheet of your selected company.  Discuss the importance and meaning of horizontal analysis.  Discuss both the positive and negative trends presented in your company.   Ratio Analysis Calculate the current ratio, quick ratio, cash to current liabilities ratio, over a two-year period.   Discuss and interpret the ratios that you calculated.  Discuss potential liquidity issues based on your calculations of the current and quick ratios.  Are there any factors that could be erroneously influencing the results of the ratios?  Discuss liquidity issues of competitive companies within the same industry.   Recommendation Based on your analysis would you recommend an individual invest in this company?  What strengths do you see?  What risks do you see?  It is perfectly acceptable to state that you would recommend avoiding this company as long as you provide support for your position.  Writing the Final Paper 1.   Must be five to seven double-spaced pages in length, and formatted according to APA style as outlined in the Ashford Writing Center. 2.   Must include a title page with the following:

a.   Title of paper b.   Student’s name c.   Course name and number d.   Instructor’s name e.   Date submitted

3.   Must begin with an introductory paragraph that has a succinct thesis statement. 4.   Must address the topic of the paper with critical thought. 5.   Must end with a conclusion that reaffirms your thesis. 6.   Must document all sources in APA style, as outlined in the Ashford Writing Center. 7.   Must include a separate reference page, formatted according to APA style as outlined in the Ashford Writing Center.