1. You are the manager of a racquet club as well as you want to determine the best cost for local rentals. Assume that the marginal cost of providing lockers is zero as well as the monthly demand as well as for lockers is estimated to be best described as fitting the equation O = 100 - 2P where P is the monthly rental cost as well as Q is the number of lockers rented per month.
a. What cost would you charge?
b. How many lockers would you rent monthly at this cost?
c. Clarify why you chose this cost?
2. Assume the demand as well as for what you "sell" rises relative to the supply of what you sell. (Meaning the Supply Curve does not shift.)
a. How would you know demand as well as has increased? (What is the first piece of information which would lead you to conclude that demand as well as has increased?) Note: I am not asking you why demand as well as may have increased.
b. What is the first thing you would do in response to the change in this market signal?
c. What might be the second thing you would do as well as why?
d. What may be the benefit or danger connected with your decision to respond to the change in events as well as how you could decrease the "danger" as well as increases the "benefit?"
3. Assume that the demand as well as for plastic surgery is cost inelastic. Are the following statements true or false? Clarify you answers in every case.
a. When the cost of plastic surgery increases the number of operations decreases
b. The percentage change in the cost of plastic surgery is less than the percentage change in quantity demanded.
c. Changes in the cost of plastic surgery do not affect the number of operations.
d. Quantity demanded is quite responsive to changes in cost.
e. If more plastic surgery is executed, expenditures on plastic surgery will decrease.
f. The marginal revenue of another operation is negative.
4. In the section of your text which deals with what is called "The Logic of Group Behavior," 1 sensible application addresses "the value of harsh bosses." In full situation of basic microeconomic theory (also known as the "theory of the firm") discuss in depth the argument about the "value of tough bosses," specifically about the issues which deal with possible worker behavior in large groups such as a business firm, as well as the various kinds of effects of worker behavior on the goals of the firm.