Questions from Managerial Economics

Q: A bidder’s value for a good may be low ($2),

A bidder’s value for a good may be low ($2), medium ($5), or high ($7). There is an equal number of potential bidders having each value. Suppose two bidders participate in a second-price auction. What...

Q: In a first-price auction, you bid __________ your value

In a first-price auction, you bid __________ your value, and in a second-price auction you bid _______ your value. a. at; above b. below; above c. below; at d. below; below

Q: 3. You’ve just decided to add a new line to your

3. You’ve just decided to add a new line to your manufacturing plant. Compute the expected loss/profit from the line addition if you estimate the following: • There’s a 50% chance that profit will inc...

Q: 4. Your software development company is considering investing in a

4. Your software development company is considering investing in a new mobile app. If it goes viral (10% probability), you expect an NPV of $1,000,000; if it is moderately successful (20% probability)...

Q: Suppose an investment project has an NPV of $75 million if

Suppose an investment project has an NPV of $75 million if it becomes successful and an NPV of –$25 million if it is a failure. What is the minimum probability of success above which you should make t...

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: Your company has a customer list that includes 3000 people. Your

Your company has a customer list that includes 3000 people. Your market research indicates that 90 of them responded to the coupon. If you send a coupon to one customer at random, what’s the probabili...

Q: Your production line has recently been producing a serious defect. One

Your production line has recently been producing a serious defect. One of two possible processes, A and B, could be the culprit. From past experience you know that the probability that A is causing th...

Q: You have two types of buyers for your product. Forty percent

You have two types of buyers for your product. Forty percent of buyers value your product at $10 and sixty percent value it at $6. What price maximizes your expected revenue? a. $10 b. $6 c. $7.60 d...

Q: You are considering entry into a market in which there is currently

You are considering entry into a market in which there is currently only one producer (incumbent). If you enter, the incumbent can take one of two strategies, price low or price high. If he prices hig...