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Carefully explain why adjusted R2is always less than R2.
Specialty Steel has carefully measured production in its new plant to determine whether
it is technically efficient in production. It has found that, for its two inputs K and L, it
has the following marginal products: MPK= 15 units and MPL= 22 units. The inputs are
hired in perfectly competitive markets, and the firm faces input costs of PK= $7.50 and
PL= $10 per unit. You have been hired as a consultant to assist Specialty in increasing
profitability. What do you recommend about production planning? Explain.
Derive the long-run supply curve of a perfectly competitive constant-cost industry. Use
graphical analysis.
When is it optimal for players to adopt mixed strategies? What condition must an
optimal mixed strategy satisfy?
Carefully define managerial economics, and explain how it is useful in
decision-making.
Carefully define sensitivity analysis, and provide three examples of how a manager
might use it.
