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Managerial Economics
Evaluate the following statements using graphical analysis. Provide a brief narrative
explanation of your graph to support your evaluation. Make sure the awes and curves in
your graphs are properly labeled.
A)
“When demand for home heating oil increases, a shortage of heating oil will
occur.”
B)
“A decrease in the supply of random access memory (RAM) chips for personal
computers causes a shortage of RAM chips.”
Using optimization theory, analyze the following quotations:
a)“The optimal number of traffic deaths in the United States is zero.”
b)“Any pollution is too much pollution.”
c)“We cannot pull U.S. troops of Afghanistan. We have committed so much already.”
d)“If Congress cuts out the NASA space station, we will have wasted all the resources
that we have already spent on it. Therefore, we must continue funding it.”
e)“Since Jet Green Airways has experienced a 25 percent increase in its insurance
premium, the airline should increase the number passengers it serves next quarter order
to spread the increase in premiums over a larger number of tickets.”
Two partners who own progressive Business Solutions, which currently operates out of
an office in a small town near Boston, just discovered a vacancy in an office building in
downtown Boston. One of the partners favors moving downtown because she believes
the additional business gained by moving downtown will exceed the higher rent at the
downtown location plus the cost of making the move. The other partner at PBS opposes
moving downtown. He argues, ‘we have already paid for office stationery, business
cards, and a large sign that cannot be moved or sold. We have spent so much on our
current office that we can’t afford to waste this money by moving now.”...