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trade protection and monopoly profits

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Economics Trade Questions. See attached file for full problem description.

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1. The intraindustry trade share is the total amount a country exports and imports of the same good. It can be calculated by dividing the quantities imported and exported by the total amount imported and exported by both Japan and the US. For example, for pharmaceuticals, you would calculate the total imported and exported as 23.98+ 3.2 + 35.37+ 6.2 =68.75. For the US, the intraindustry trade share would then be 59.35/68.75 =86%. Japan would then have the other 14%. You should get these figures for the other six industries for the US:
Iron and steel:63%
Medical instruments:81%
The higher this percentage, the more intra-industry trade the nation engages in.

2. A monopoly maximizes profit by choosing an ...

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Pricing Strategies and Profit Maximizing Behavior

1. Ageless Corp. has a patent for a new promising age-defying moisturizer cream. The annual demand, marginal revenue, and marginal cost functions for this cream is estimated as:

P = 150,000 - 250 (Q)

MR = 150,000 - 500Q)

MC = 100

A) If Ageless Corp. behaves as a profit maximizing monopoly, determine the price and quantity that prevails in this market.

B) Determine the socially efficient price and quantity in this market.

2. Pet Peeve Inc. manufactures and sells a highly realistic computerized pet toy in the US market. Marginal costs for manufacturing and distribution of the toy is currently $100 per unit. Based on recent sales experience, the estimated total cost, demand, and marginal revenue functions for this pet toy are:

TC = 1,200,000 + 100 (Q)

P = 300 0.0016(Q)

MR = 300 0.0032(Q)

Assuming a profit maximizing behavior for this firm, calculate:

A) Output.

B) Price.

C) Total revenue.

D) Fixed Cost.

E) Total variable cost.

F) Total cost.

3. Healthy Inc. is operating a small grocery store in a remote area with no competition. Recently, however, several prospective competitors are looking around and are contemplating entry into this market.

A) What pricing strategy she might utilize to deter the competitors from entering his market?

B) Assume that eventually large number of competitors enter this market. What do you think would be the differences in the grocery market before and after of the entry by the new firms?

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