Exercise 1. You are about to sign-up for a movie streaming service and are trying to decide how many movies you should subscribe to. Each movie you stream costs $4.00. How many movies should you watch...

Assignment file


Exercise 1. You are about to sign-up for a movie streaming service and are trying to decide how many movies you should subscribe to. Each movie you stream costs $4.00. How many movies should you watch based on the table below, which represents the marginal benefits of streaming a certain amount of movies? Movies Streamed Marginal Benefit 1 $7.00 2 $5.50 3 $4.50 4 $3.50 5 $2.00 6 $1.50 Exercise 2. You are the manager of a firm that specializes in small single-board widgets. Your goal is to determine the number of units (Z) that must be produced and sold by your firm each month in order to maximize profits. The total benefits (revenues) and costs to your firm of producing various quantities are given in the first three columns of the following table. Based on this scenario, complete the table and answer the accompanying questions: ( 1 ) Control Variable Total Benefits Total Cost Net Benefits Marginal Benefit MarginalMarginal CostNet Z B(Z) C(Z) N (Z) MB(Z) MC(Z)Benefit MNB(Z) 0 0 0 1 200 10 2 380 30 3 540 60 4 680 100 5 800 150 6 900 210 7 980 280 8 1,040 360 9 1,080 450 10 1,100 550 a. How many units (Z) maximize net benefits? b. What is the relationship between marginal benefits and marginal costs at the level of Z you determined above? c. Graph the total cost and total benefit curves. d. On another graph, plot the points for the marginal cost, marginal benefit, and marginal net benefit. e. Show how the two graphs relate to each other. ( − ) ( − )Exercise 3. Your software company recently instituted a highly regarded training program for newly hired software developers. The benefits of this program include not only the benefits to employees, but also the goodwill generated by an increase in your reputation among customers and professional groups. The costs of this training program include all of the labor, space, and consultants necessary. Suppose these benefits and costs are given by B(Q) = 100Q 2Q2 and C(Q) = 10Q, where Q represents the amount of hours each software developer should spend in training. (Note that MB = 100 4Q, MC = 10, and also that time can be measured in fractions of one hour.) a. What level of Q maximizes the total benefits of your newly introduced training pro- gram? b. What level of Q minimizes the total costs of the program? c. What level of Q maximizes the net benefits? d. What level of training is optimal? Why? Exercise 4. College Retirement Equities Fund (CREF) is a pension fund that has billions of dollars invested in the stock market. Fund participants voted a few years ago on a proposal that would have placed strict limits on the amount of compensation paid to CREF executives. Why do you think 75 percent of the participants voted against the proposal?