# Managerial Economics & Business Strategy, 10e Michael Baye, Jeff Prince, 2021 Instructor Solution Manual

## ( Instructor Solution Manual)

#### Managerial Economics & Business Strategy, 10e Michael Baye, Jeff Prince, 2021 Instructor Solution Manual

Edition: 10 Edition

Author Name: Michael Baye, Jeff Prince

## contact:

### [email protected]

##### Whatsapp +1 (949) 734-4773

for more books  for  ( Test Bank and Solution Manual) click here

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Chapter 1

The Fundamentals of Managerial Economics Loading... Taking too long? Reload document
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## ( Instructor Solution Manual)

#### Managerial Economics & Business Strategy, 10e Michael Baye, Jeff Prince, 2021 Instructor Solution Manual

Edition: 10 Edition

Author Name: Michael Baye, Jeff Prince

## contact:

### [email protected]

##### Whatsapp +1 (949) 734-4773

for more books  for  ( Test Bank and Solution Manual) click here

sample free

Chapter 1

The Fundamentals of Managerial Economics

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.

1. The maximum you would be willing to pay for this asset is the present value, which is

1. Net benefits are N(Q) = 20 + 24Q – 4Q2.
2. 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.
3. Marginal net benefits are MNB(Q) = 24 – 8Q.
4. Marginal net benefits when are MNB(1) = 24 – 8(1) = 16 and when  they are MNB(5) = 24 – 8(5) = -16.
5. Setting MNB(Q) = 24 – 8Q = 0 and solving for Q, we see that net benefits are maximized when Q = 3.
6. When net benefits are maximized at Q = 3, marginal net benefits are zero. That is, MNB(3) = 24 – 8(3) = 0.

1. The value of the firm before it pays out current dividends is

.

1. The value of the firm immediately after paying the dividend is

.

1. The present value of the perpetual stream of cash flows. This is given by

1. 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) 100 1200 950 250 210 60 150 101 1400 1020 380 200 70 130 102 1590 1100 490 190 80 110 103 1770 1190 580 180 90 90 104 1940 1290 650 170 100 70 105 2100 1400 700 160 110 50 106 2250 1520 730 150 120 30 107 2390 1650 740 140 130 10 108 2520 1790 730 130 140 -10 109 2640 1940 700 120 150 -30 110 2750 2100 650 110 160 -50

Chapter 1

The Fundamentals of Managerial Economics

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.

1. The maximum you would be willing to pay for this asset is the present value, which is

1. Net benefits are N(Q) = 20 + 24Q – 4Q2.
2. 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.
3. Marginal net benefits are MNB(Q) = 24 – 8Q.
4. Marginal net benefits when are MNB(1) = 24 – 8(1) = 16 and when  they are MNB(5) = 24 – 8(5) = -16.
5. Setting MNB(Q) = 24 – 8Q = 0 and solving for Q, we see that net benefits are maximized when Q = 3.
6. When net benefits are maximized at Q = 3, marginal net benefits are zero. That is, MNB(3) = 24 – 8(3) = 0.

1. The value of the firm before it pays out current dividends is

.

1. The value of the firm immediately after paying the dividend is

.

1. The present value of the perpetual stream of cash flows. This is given by

1. 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) 100 1200 950 250 210 60 150 101 1400 1020 380 200 70 130 102 1590 1100 490 190 80 110 103 1770 1190 580 180 90 90 104 1940 1290 650 170 100 70 105 2100 1400 700 160 110 50 106 2250 1520 730 150 120 30 107 2390 1650 740 140 130 10 108 2520 1790 730 130 140 -10 109 2640 1940 700 120 150 -30 110 2750 2100 650 110 160 -50

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