Questions from Managerial Economics

Q: A firm faces two kinds of employees, those able to sell

A firm faces two kinds of employees, those able to sell 10 units/year, and those able to sell 5 units/year. High-productivity employees are willing to work for $100/year while low-productivity employe...

Q: American Airlines and British Airways are proposing to merge. If British

American Airlines and British Airways are proposing to merge. If British pilots and American pilots are represented by different unions, how would this merger affect airline costs?

Q: You’ve entered into a contract to purchase a new house, and

You’ve entered into a contract to purchase a new house, and the closing is scheduled for next week. It’s typical for some last-minute bargaining to occur at the closing table, where sellers often try...

Q: Robert G. Flanders Jr., the state-appointed receiver for

Robert G. Flanders Jr., the state-appointed receiver for Central Falls, RI, said his city’s declaration of bankruptcy had proved invaluable in helping it cut costs. Before the city declared bankruptcy...

Q: Your company has a customer who is shutting down a production line

Your company has a customer who is shutting down a production line, and it is your responsibility to dispose of the extrusion machine. The company could keep it in inventory for a possible future prod...

Q: The HR department is trying to fill a vacant position for a

The HR department is trying to fill a vacant position for a job with a small talent pool. Valid applications arrive every week or so, and the applicants all seem to bring different levels of expertise...

Q: In the final round of a TV game show, contestants have

In the final round of a TV game show, contestants have a chance to increase their current winnings of $1 million dollars to $2 million dollars. If they are wrong, their prize is decreased to $500,000....

Q: To test the effectiveness of a two Web advertising agencies, you

To test the effectiveness of a two Web advertising agencies, you increase your ad purchase with agency A by 50% without changing your purchase through agency B. The referrals to your website from agen...

Q: You are offered the following gamble based on coin flips. If

You are offered the following gamble based on coin flips. If the first heads occurs on the first flip, you get $2. If the first heads occurs on the second flip you get $4, and so on so that if the fir...

Q: You hold an auction among three bidders. You estimate that each

You hold an auction among three bidders. You estimate that each bidder has a value of either $16 or $20 for the item, and you attach probabilities to each value of 50%. What is the expected price? If...