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Applied Problems

1. Suppose you are the manager of a California winery. How would you expect the following events to affect the price you receive for a bottle of wine?

a. The price of comparable French wines decreases.

b. One hundred new wineries open in California.

c. The unemployment rate in the United States decreases.

d. The price of cheese increases. 

e. The price of a glass bottle increases significantly due to new government antishatter regulations.
f. Researchers discover a new wine-making technology that reduces production costs.
g. The price of wine vinegar, which is made from the leftover grape mash, increases.

h. The average age of consumers increases, and older people drink less wine. 

From Chapter 3

Mathematical Exercises

1. Assume the only choice variable is x. The total benefit function is B(x) = 170x - x2, and
the cost function is C(x) =  100 - 10x + 2x2. 
a. What are the marginal benefit and marginal cost functions?

b. Set up the net benefit function and then determine the level of x that maximizes net benefit.

c. What is the maximum level of net benefit?

From Chapter 4

Technical Problems

2. Regression analysis is often referred to as least-squares regression. Why is this name appropriate?
3. Regression analysis involves estimating the values of parameters and testing the estimated parameters for significance. Why must parameter estimates be tested for statistical significance?