SOLUTION MANUAL FOR Managerial Economics and Business Strategy 10th Edition By Michael Baye, Jeff Prince | All Chapters || Newest Version A+

SOLUTION MANUAL FOR Managerial Economics and Business Strategy 10th Edition By Michael Baye, Jeff Prince | All Chapters || Newest Version 2024 A+ COMPLETE SOLUTION MANUAL FOR Managerial Economics and Business Strategy 10th Edition By Michael Baye, Jeff Prince Chapter 1 The Fundamentals of Managerial Economics Answers to Questions and Problems 1. This situation best represents producer-producer rivalry. Here, Southwest is a producer attempting to steal customers away from other producers in the form of lower prices. 2. The maximum you would be willing to pay for this asset is the present value, which is 3. a. Net benefits are N(Q) = 20 + 24Q – 4Q2 . b. Net benefits when Q = 1 are N(1) = 20 + 24 – 4 = 40 and when Q = 5 they are N(5) = 20 + 24(5) – 4(5)2 = 40. c. Marginal net benefits are MNB(Q) = 24 – 8Q. d. Marginal net benefits when Q  1 are MNB(1) = 24 – 8(1) = 16 and when Q  5 they are MNB(5) = 24 – 8(5) = -16. e. Setting MNB(Q) = 24 – 8Q = 0 and solving for Q, we see that net benefits are maximized when Q = 3. f. When net benefits are maximized at Q = 3, marginal net benefits are zero. That is, MNB(3) = 24 – 8(3) = 0. 4. a. The value of the firm before it pays out current dividends is ( ) . b. The value of the firm immediately after paying the dividend is The present value of the perpetual stream of cash flows. This is given by 6. The completed table looks like this: Control Variable Q Total Benefits B(Q) Total Cost C(Q) Net Benefits N(Q) Marginal Benefit MB(Q) Marginal Cost MC(Q) Marginal Net Benefit MNB(Q) 160 -50 a. Net benefits are maximized at Q = 107. b. Marginal cost is slightly smaller than marginal benefit (MC = 130 and MB = 140). This is due to the discrete nature of the control variable. 7. a. The net present value of attending school is the present value of the benefits derived from attending school (including the stream of higher earnings and the value to you of the work environment and prestige that your education provides), minus the opportunity cost of attending school. As noted in the text, the opportunity cost of attending school is generally greater than the cost of books and tuition. It is rational for an individual to enroll in graduate school when his or her net present value is greater than zero. b. Since this decreases the opportunity cost of getting an M.B.A., one would expect more students to apply for admission into M.B.A. Programs.