Scenario 1 (length: as needed)
A cupcake store is located in a mall and is the only cupcake
store in that mall. The demand schedule for cupcakes (per dozen) is
given in the table below. If the marginal cost to produce a dozen
cupcakes is $4 per unit, how many units should the firm
| (Dozen per
1. What price should the cupcake store charge?
2. If the fixed cost for the firm is $100 per day, how much
profit will the firm make in one day?
3. On page 70, what is the answer choice letter for the
individual problem six involving Christine’s purchase?
4. On page 71, what is the answer choice letter for the
individual problem eight involving consumer surplus?
Scenario 2 (length: as needed)
Problem One: As the price of video games is raised from $40 to
$45, their quantity demanded fell from 1.5 million copies to 1.2
million copies. The correct answer is negative so do not perform
the last step of taking the absolute value of what you compute for
the elasticity of demand. The elasticity of demand of video games
is (select the answer closest to what you calculate): [a] – 0.25
[b] – 1.8 [c] – 2.08
Problem Two: Jim saw a decrease in the quantity demanded for his
firm’s product from 8000 to 6000 units a week when he raised the
price of the product from $200 to $250. The correct answer is
negative so do not perform the last step of taking the absolute
value of what you compute for the elasticity of demand. What is
Jim’s own price elasticity of demand (select the answer closest to
what you calculate)
[a] – 1.
[b] – 1
[c] – 0.25
Problem Three: On page 99, what is the answer choice letter for
the individual problem two involving changes in supply and
Problem Four: On page 99, what is the answer choice letter for
the individual problem ten involving a decrease in the tax for
Scenario 3 (length: as needed)
In “Kitchen Nightmares,” Chef Gordon Ramsay visits struggling
restaurants and gives the owners of the restaurant a number of
recommendations intended to reverse the restaurant’s prospects. One
suggestion Chef Ramsay commonly makes is to reduce the size of the
restaurant’s menu and concentrate on a smaller number of offerings.
Our textbook has several theories that can be used to explain how
that recommendation can reduce costs.
1. The above recommendation can involves an application of
Diseconomies of Scope (answer True or False).
2. The above recommendation can involve use of the Learning
Curve concept to suggest a smaller menu would lead to a cost
reduction (answer True or False).
Scenario 4 (length: as needed)
Consider the market for corn in the United States. Suppose that
the mandated percentage of ethanol in gasoline is increased and at
the same time a corn blight destroys a significant portion of the
corn crop. If you were to use a supply and demand diagram to show
this situation and what happens to the equilibrium quantity and the
price of corn in the United States, the diagram could be similar to
Figure 8.5 on page 91 (consider the diagram without the numerical
values). Answer with either a True or False (select the best
Scenario 5 (length: one paragraph)
Review the following resources:
Website: S&P Case-Shiller 20-City Home Price Index
Website: New One Family Houses Sold: United States (HSN1F)
During the housing crash in 2008, housing prices fell, and the
number of new houses sold in the United States also fell. The link
to New One Family Houses Sold does not include existing house
sales, but assume that existing house sales fell as well. Answer
the following question: The housing crash involved changes to the
the determinants of demand and the determinants of supply that
resulted in some of the changes and shifts to both the demand curve
and the supply curve (answer either True or False, select the best