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Managerial Economics: Calculation Example Essay

Managerial Economics: Calculation Example Essay

1. The demand for MICHTEC’s products is related to the state of the economy. If the economy is expanding next year (an above-normal growth in GDP), the company expects sales to be $90 million. If a recession occurs next year (a decline in GDP), sales are expected to be $75 million. If next year is normal (a moderate growth in GDP), sales are expected to be $85 million. MUCHTEC’s economists estimate the chances that the economy will be either expanding, normal, or in a recession next year at 0.2, 0.5, and 0.3, respectively.

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