Solutions for Managerial Economics, 9th Edition by William F.
Samuelson
,SOLUTION MANUAL FOR q q
Managerial qEconomics, q9th qEdition qWilliam qF. qSamuelson, qStephen qG. qMarks, qJay qL. qZagorsky
Answers qto
qBack-of-Chapter
Problems
Chapter q1
1. Managerial qeconomics qis qthe qanalysis qof qimportant qmanagement qdecisions qusing qthe qtools
qof qeconomics. qMost qbusiness qdecisions qare qmotivated qby qthe qgoal qof qmaximizing qthe qfirm‟s
qprofit. qThe qtools qof qmanagerial qeconomics qprovide qa qguide qto qprofit- qmaximizing
qdecisions.
2. i) qMultinational qProduction qand qPricing. qThe qglobal qautomobile qcompany qneeds
qinformation qon q1) qdemand q(how qmany qvehicles qcan qbe qsold qin qeach qmarket qat qdifferent
qprices), q2) qplant qcapacities qand qproduction qcosts, qand q3) qtrade qbarriers qand qtariffs.
ii) Market qEntry. qRemember qthat qUber qbegan qas qa qridesharing qidea, qbefore qultimately
qbecoming qa qmarket qdisruptor qwith qrespect qto qthe qlong qestablished qtaxicab qindustry. qCrucial
qnecessary qinformation qand qquestions qinclude: qWould qcity qregulators qallow qUber qto qoperate qat
qall? qWhat qmarket qniche q(how qmuch qdemand) qcould qit qcarve qout qof qthe qtaxi qand qcar qservice
qmarkets? qAt qwhat qprices qrelative qto qtaxis? qWould qcustomers qtrust qa qrideshare qservice? qHow
qmany qdrivers qcould qrideshare qfirms qattract qand qat qwhat qcosts?
iii) Building q a qNew qBridge. qThe qauthority qshould qestimate qusage qof qthe qbridge qover qits
quseful qlife, qthe qlikely qcost qof qbuilding qand qmaintaining qthe qbridge, qand qother qimportant
qside-effects, qpro qand qcon q-- qincluding qpositive qeffects qon qbusiness qactivity qand qthe qimpacts
qon qair qpollution qand qtraffic qcongestion.
iv) A q Regulatory qProblem. qBefore qdeciding qwhether qto qpromote qthe qoil-to-coal qconversion,
qgovernment qregulators qneed qinformation qon qhow qmuch qoil qwould qbe qsaved q(and qthe qdollar
qvalue qof qsavings) qand qthe qcost qof qthe qchain qof qside-effects q-- qnot qonly qthe qdirect qcost qof
qelectricity qprovision qbut qalso qpollution qcosts qand qenvironmental qdamage.
, v) Boeing qand qthe q737 qMax. qBoeing qgathered qextensive qinformation qon qpotential qairline
qdemand qfor qa qnew qmore qfuel-efficient qaircraft, qyet qconsiderable quncertainty qremained qwith
qrespect qto qfuture qorders. qWould qthe qnew qaircraft qshift qsignificant qorders qand qsales qfrom
qAirbus, qBoeing‟s qlongtime qrival? qCould qBoeing qachieve qits qaggressive qR&D qand qproduction
qplan qon qbudget qand qon qschedule? qCould qit qaddress qand qsolve qmyriad qreliability qand qsafety
qproblems, qbig qand qsmall? qHow qsevere qwould qbe qongoing qregulatory qoversight qand qhow qhigh qa
qbar qwould qthe qFAA qset qfor qcertification qrequirements? qFive qor qten qyears qfrom qnow, qwould
qthe qworld qeconomy qcontinue qto qgrow, qfueling qstrong qdemand qfor qair qtravel qand qfor qthe qnew
qand qimproved qaircraft?
vi) An qR&D qDecision. qThe qpharmaceutical qcompany qshould qquiz qits qscientists qon qthe qchances
qof qsuccess q(and qthe qtimetable qfor qcompletion) qfor qeach qR&D qapproach. qThe qcompany's
qmarketing qdepartment qwould qsupply qestimates qof qpossible qrevenues qfrom qthe qdrug; qits
qproduction qdepartment qwould qestimate qpossible qcosts.
vii) David qLetterman. qDave qmust qcarefully qassess qwhat qhe qwants qfrom qa qnew qcontract q(in
qparticular qhow qmuch qhe qvalues qthe qearlier qtime qslot). qAs qthe qnegotiations qunfold, qDave qwill
qglean qvaluable qinformation qas qto qthe qcurrent qcompeting qoffers qof qCBS qand qNBC. qOf qcourse,
qDave qmust qalso qtry qto qassess qhow qfar qthe qtwo qnetworks qmight qbe qwilling qto qgo qin qsweetening
qtheir qoffers.
3. The qsix qsteps qmight qlead qthe qsoft-drink qfirm qto qconsider qthe qfollowing qquestions. qStep q1:
qWhat qis qthe qcontext? qIs qthis qthe qfirm‟s qfirst qsuch qsoft qdrink? qWill qit qbe qfirst qto qthe
qmarketplace, qor qis qit qimitating qa qcompetitor? qStep q2: qWhat qis qthe qprofit qpotential qfor qsuch qa
qdrink? qWould qthe qdrink qachieve qother qobjectives? qIs qthe qfruit qdrink qcomplementary qto qthe
qfirm‟s qother qproducts? qWould qit qenhance qthe qfirm‟s qimage? qStep q3: qWhich qof qsix qversions qof
qthe qdrink qshould qthe qfirm qintroduce? qWhen q(now qor qlater) qand qwhere q(regionally, qnationally,
qor qinternationally) qshould qit qintroduce qthe qdrink? qWhat qis qan qappropriate qadvertising qand
qpromotion qpolicy? qStep q4: qWhat qare qthe qfirm‟s qprofit qforecasts qfor qthe qdrink qin qits qfirst,
qsecond, qand qthird qyears? qWhat qare qthe qchances qthat qthe qdrink qwill qbe qa qfailure qafter q15
qmonths? qShould qthe qfirm qtest qmarket qthe qdrink qbefore qlaunching qit? qStep q5: qBased qon qthe
qanswers qto qthe qquestions qin qSteps q1 qthrough q4, qwhat qis qthe qfirm‟s qmost qprofitable qcourse qof
qaction? qStep q6: qIn qlight qof qexpected q(or qunexpected) qdevelopments qin qthe qfirst qyear qof qthe
qlaunch, qhow qshould qthe qfirm qmodify qits qcourse qof qaction?
,
Samuelson
,SOLUTION MANUAL FOR q q
Managerial qEconomics, q9th qEdition qWilliam qF. qSamuelson, qStephen qG. qMarks, qJay qL. qZagorsky
Answers qto
qBack-of-Chapter
Problems
Chapter q1
1. Managerial qeconomics qis qthe qanalysis qof qimportant qmanagement qdecisions qusing qthe qtools
qof qeconomics. qMost qbusiness qdecisions qare qmotivated qby qthe qgoal qof qmaximizing qthe qfirm‟s
qprofit. qThe qtools qof qmanagerial qeconomics qprovide qa qguide qto qprofit- qmaximizing
qdecisions.
2. i) qMultinational qProduction qand qPricing. qThe qglobal qautomobile qcompany qneeds
qinformation qon q1) qdemand q(how qmany qvehicles qcan qbe qsold qin qeach qmarket qat qdifferent
qprices), q2) qplant qcapacities qand qproduction qcosts, qand q3) qtrade qbarriers qand qtariffs.
ii) Market qEntry. qRemember qthat qUber qbegan qas qa qridesharing qidea, qbefore qultimately
qbecoming qa qmarket qdisruptor qwith qrespect qto qthe qlong qestablished qtaxicab qindustry. qCrucial
qnecessary qinformation qand qquestions qinclude: qWould qcity qregulators qallow qUber qto qoperate qat
qall? qWhat qmarket qniche q(how qmuch qdemand) qcould qit qcarve qout qof qthe qtaxi qand qcar qservice
qmarkets? qAt qwhat qprices qrelative qto qtaxis? qWould qcustomers qtrust qa qrideshare qservice? qHow
qmany qdrivers qcould qrideshare qfirms qattract qand qat qwhat qcosts?
iii) Building q a qNew qBridge. qThe qauthority qshould qestimate qusage qof qthe qbridge qover qits
quseful qlife, qthe qlikely qcost qof qbuilding qand qmaintaining qthe qbridge, qand qother qimportant
qside-effects, qpro qand qcon q-- qincluding qpositive qeffects qon qbusiness qactivity qand qthe qimpacts
qon qair qpollution qand qtraffic qcongestion.
iv) A q Regulatory qProblem. qBefore qdeciding qwhether qto qpromote qthe qoil-to-coal qconversion,
qgovernment qregulators qneed qinformation qon qhow qmuch qoil qwould qbe qsaved q(and qthe qdollar
qvalue qof qsavings) qand qthe qcost qof qthe qchain qof qside-effects q-- qnot qonly qthe qdirect qcost qof
qelectricity qprovision qbut qalso qpollution qcosts qand qenvironmental qdamage.
, v) Boeing qand qthe q737 qMax. qBoeing qgathered qextensive qinformation qon qpotential qairline
qdemand qfor qa qnew qmore qfuel-efficient qaircraft, qyet qconsiderable quncertainty qremained qwith
qrespect qto qfuture qorders. qWould qthe qnew qaircraft qshift qsignificant qorders qand qsales qfrom
qAirbus, qBoeing‟s qlongtime qrival? qCould qBoeing qachieve qits qaggressive qR&D qand qproduction
qplan qon qbudget qand qon qschedule? qCould qit qaddress qand qsolve qmyriad qreliability qand qsafety
qproblems, qbig qand qsmall? qHow qsevere qwould qbe qongoing qregulatory qoversight qand qhow qhigh qa
qbar qwould qthe qFAA qset qfor qcertification qrequirements? qFive qor qten qyears qfrom qnow, qwould
qthe qworld qeconomy qcontinue qto qgrow, qfueling qstrong qdemand qfor qair qtravel qand qfor qthe qnew
qand qimproved qaircraft?
vi) An qR&D qDecision. qThe qpharmaceutical qcompany qshould qquiz qits qscientists qon qthe qchances
qof qsuccess q(and qthe qtimetable qfor qcompletion) qfor qeach qR&D qapproach. qThe qcompany's
qmarketing qdepartment qwould qsupply qestimates qof qpossible qrevenues qfrom qthe qdrug; qits
qproduction qdepartment qwould qestimate qpossible qcosts.
vii) David qLetterman. qDave qmust qcarefully qassess qwhat qhe qwants qfrom qa qnew qcontract q(in
qparticular qhow qmuch qhe qvalues qthe qearlier qtime qslot). qAs qthe qnegotiations qunfold, qDave qwill
qglean qvaluable qinformation qas qto qthe qcurrent qcompeting qoffers qof qCBS qand qNBC. qOf qcourse,
qDave qmust qalso qtry qto qassess qhow qfar qthe qtwo qnetworks qmight qbe qwilling qto qgo qin qsweetening
qtheir qoffers.
3. The qsix qsteps qmight qlead qthe qsoft-drink qfirm qto qconsider qthe qfollowing qquestions. qStep q1:
qWhat qis qthe qcontext? qIs qthis qthe qfirm‟s qfirst qsuch qsoft qdrink? qWill qit qbe qfirst qto qthe
qmarketplace, qor qis qit qimitating qa qcompetitor? qStep q2: qWhat qis qthe qprofit qpotential qfor qsuch qa
qdrink? qWould qthe qdrink qachieve qother qobjectives? qIs qthe qfruit qdrink qcomplementary qto qthe
qfirm‟s qother qproducts? qWould qit qenhance qthe qfirm‟s qimage? qStep q3: qWhich qof qsix qversions qof
qthe qdrink qshould qthe qfirm qintroduce? qWhen q(now qor qlater) qand qwhere q(regionally, qnationally,
qor qinternationally) qshould qit qintroduce qthe qdrink? qWhat qis qan qappropriate qadvertising qand
qpromotion qpolicy? qStep q4: qWhat qare qthe qfirm‟s qprofit qforecasts qfor qthe qdrink qin qits qfirst,
qsecond, qand qthird qyears? qWhat qare qthe qchances qthat qthe qdrink qwill qbe qa qfailure qafter q15
qmonths? qShould qthe qfirm qtest qmarket qthe qdrink qbefore qlaunching qit? qStep q5: qBased qon qthe
qanswers qto qthe qquestions qin qSteps q1 qthrough q4, qwhat qis qthe qfirm‟s qmost qprofitable qcourse qof
qaction? qStep q6: qIn qlight qof qexpected q(or qunexpected) qdevelopments qin qthe qfirst qyear qof qthe
qlaunch, qhow qshould qthe qfirm qmodify qits qcourse qof qaction?
,
