ECON. 103

UNIVERSITY OF WISCONSIN-MILWAUKEE PRINCIPLES OF MICROECONOMICS

CHAKRABARTI ECON. 103 SPRING 2017

MIDTERM EXAMINATION # 3

Deadline: April 17, 2017 You must submit your answers by the deadline (above) in PDF format as an attachment to an electronic mail addressed to [email protected], including a copy to [email protected]. Hand-written answers and/or hand-drawn graphs will not be graded. Any answer without clear and precise explanation will not receive any credit.

Good Luck!



Question. Suppose you are working as a consultant for a firm that is a monopoly and is worried about its policies in the short run. What would you recommend in terms of quantity changes (raise, cut, shut down or stay put) and price changes (raise, cut, stay put) in each of the following situations (a through e): a. [10 points] MR = $248 P = $268 MC = $198 AVC = $208 b. [10 points] MR = $298 MC = $348 AVC = $288 c. [10 points] P = $269 MC = $319 AVC = $289 d. [10 points] MR = $100 MC = $50 AVC = $90 e. [10 points] MR = $100 MC = $100 AVC = $90 [P = price; MR = marginal revenue; AVC = average variable cost; MC = marginal cost]