Questions from Managerial Economics

Q: How is a crossover discount rate calculated, and how does it

How is a crossover discount rate calculated, and how does it affect capital budgeting decisions?

Q: An efficient firm employs inputs in such proportions that the marginal product

An efficient firm employs inputs in such proportions that the marginal product/price ratios for all inputs are equal. In terms of capital budgeting, this implies that the marginal cost of debt should...

Q: Suppose that Black & Decker’s interest rate on newly-issued debt

Suppose that Black & Decker’s interest rate on newly-issued debt is 7.5% and the firm’s marginal federal-plus-state income tax rate is 40%. This implies a 4.5% after-tax component cost of debt. Also a...

Q: Research in financial economics concludes that stockholders of target firms in takeover

Research in financial economics concludes that stockholders of target firms in takeover battles “win” (earn abnormal returns) and that stockholders of successful bidders do not lose subsequent to take...

Q: Give some illustrations of managerial decision situations in which you think the

Give some illustrations of managerial decision situations in which you think the linear programming technique would be useful.

Q: Why can’t linear programming be used in each of the following circumstances

Why can’t linear programming be used in each of the following circumstances a. Strong economies of scale exist. b. As the firm expands output, the prices of variable factors of production increase. c...

Q: Do equal distances along a given production process ray in a linear

Do equal distances along a given production process ray in a linear programming problem always represent an identical level of output?

Q: Assume that output can be produced only using processes A and B

Assume that output can be produced only using processes A and B. Process A requires inputs L and K to be combined in the fixed ratio 2L:4K, and process B requires 4L:2K. Is it possible to pro...

Q: Describe the relative distance method used in graphic linear programming analysis.

Describe the relative distance method used in graphic linear programming analysis.

Q: Is the number of isocost, isorevenue, or isoprofit lines in

Is the number of isocost, isorevenue, or isoprofit lines in a typical two-input bounded feasible space limited?