Economics Sample Questions

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MVMS : Q. 1 Beta Industries manufactures floppy disks that consumers perceive as identical to those produced by numerous other manufacturers. Recently, Beta hired an econometrician to estimate its cost function for producing boxes of one dozen floppy disks. The estimated cost function is . a. What are the firm's fixed costs? | b. What is the firm's marginal cost? | Now suppose other firms in the market sell the product at a price of $10. | c. How much should this firm charge for the product? | d. What is the optimal level of output to maximize profits? | How much profit will be earned? | f. In the long run, should this firm continue to operate or shut down? Why? | Q. 2 The following article is from the wall street journal ("To Tailor Burgers for France, McDonalds Enlists Baguette", February 24, 2012) McDonald's is gearing up to launch a baguette-based burger on the French market, part of a wider move to offer more local items in its restaurants and tap into a more upscale diner. | For six weeks starting April 18, the 1,228 McDonald's restaurants across France will feature the McBaguette, with a burger topped with French-made Emmental cheese and mustard. It will replace the chain's current special offer here: three limited-edition burgers featuring locally produced cheeses. | The promotion is in line with the U.S. company's successful global strategy of updating its restaurants to appeal to a broader clientele, while offering a more varied menu, up and down the price scale. In France that involves tapping into a national obsession: bread. | France's national Bread Observatory, which studies and promotes bread, says the French each consume about 150 grams of it a day, or roughly 55 kilograms a year. Many of them eat it with most meals, viewing bread almost as an extension of the knife and fork in pushing food around on the plate.

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