1 . Individual Problems 4-1 Which of the following is an example of an extent decision? Children in poor neighborhoods often have bleak outlooks on life and see little gain from studying. In a recent ...

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1 . Individual Problems 4-1
Which of the following is an example of an extent decision?
Children in poor neighborhoods often have bleak outlooks on life and see little gain from studying. In a
recent experiment, children in poor neighborhoods were paid $100 for each A they earned during a six-
week grade reporting cycle.
2Suppose a participant in this experiment was expending $0 worth of effort in studying for each class
before the experiment. Over the next 6 weeks, the student has a math class and an English class,
where getting an A in math would require the student to exert $80 worth of effort, while getting an A in
English would require the student to exert $90 worth of effort.
3Children in poor neighborhoods often have bleak outlooks on life and see little gain from studying. In
a recent experiment, children in poor neighborhoods were paid $100 for each A they earned during a
six-week grade reporting cycle.
Suppose a participant in this experiment was expending $0 worth of effort in studying for each class
before the experiment. Over the next 6 weeks, the student has a math class and an English class,
where getting an A in math would require the student to exert $80 worth of effort, while getting an A in
English would require the student to exert $90 worth of effort.
1 . Individual Problems 4-1
Which of the following is an example of an extent decision?
Should you develop a new product for an existing product line?
How much of a discount should be given on products during the upcoming holiday sale?
Should your company expand an existing product into a new region?
Should the advertising budget be changed for the upcoming year?
2 . Individual Problems 4-2
You run a game-day shuttle service for parking services for the local ball club. Suppose you are
compensated $30 per customer, per ride. In other words, your marginal revenue is $30. Your costs for
different customer loads are summarized in the following table.
In order to maximize profits, you should carry 6 customers per load.
Customer
s Total Cost Marginal Cost Average Cost
($) ($ per customer) ($ per customer)
1 $30 $30.00

Customer
s Total Cost Marginal Cost Average Cost
($) ($ per customer) ($ per customer)
$6
2 $36 $18.00
$12
3 $48 $16.00
$18
4 $66 $16.50
$24
5 $90 $18.00
$30
6 $120 $20.00
$36
7 $156 $22.29
$42
8 $198 $24.75
3 . Individual Problems 4-3
Children in poor neighborhoods often have bleak outlooks on life and see little gain from studying. In a
recent experiment, children in poor neighborhoods were paid $100 for each A they earned during a
six-week grade reporting cycle.
Suppose a participant in this experiment was expending $0 worth of effort in studying for each class
before the experiment. Over the next 6 weeks, the student has a math class and an English class,

where getting an A in math would require the student to exert $80 worth of effort, while getting an A
in English would require the student to exert $90 worth of effort.
In this experiment, the