Suppose that the federal reserve wishes to keep nominal interest rate at a target level of 5%. Draw a money supply and demand diagram in which the current equilibrium interest rate is 5%. Explain how the federal reserve, using Open Market Operations monetary policy, could keep the interest rate at its target level if the demand
1. The industry demand function facing two oligopolists is p = 100 - 0.5y1 - 0.5y2, where yi is the production of firm i, and p is the price of their homogeneous output. Each firm has a cost function of the form ci = 10yi (a) Calculate the Cournot level of output for each firm. (b) Calculate the output for each firm when fir
(Demand) P=$85Q-$0.2Q (Marginal Reveune) MR=$85-$0.4Q (Total Cost) TC=$900+$20Q+$0.8Q2 (Marginal Cost) MC=$20+$1.6Q where P is price (in dollars), Q is output (in thousands of megawatt hours) and TC is total cost (in thousands of dollars). a) if the firm were operating as a pure monopoli
3 (Monopoly Pricing and Output) Shelley works at University florist in Minneapolis. Every Friday night, the owner of the florist shop gives her the unsold inventory of roses at no cost, which Shelley then sells on Riverside Avenue to pedestrians and motorists. Shelley has a monopoly on rose sales in this area, and faces a d
Identify the necessary conditions for A to create a win-win situation in pricing T. Explain whether A can satisfy these conditions based on its current situation. Propose and evaluate at least one strategy A could use if it wanted to try to create a win-win situation in its competition with G.
Assuming that G does enter the market, discuss the profits associated with different pricing scenarios, and identify the equilibrium price and profits for each firm. Evaluate how a focus on short-term or long-term goals would affect potential profits.
Please help with the following problem. Cournot and Bertrand Equilibria and its relation to tough and soft Commitments.
1) Externalities 1 Assume that scientific studies provide you with the following information concerning the benefits and costs of sulfur dioxide emissions: Marginal benefits of abating (reducing) emissions: MB = 400 - 10A Marginal costs of abating emissions: MC = 100 + 20A where A is the quantity abated in millions of
Given this information, answer the following: 1. In the table above, fill in the missing values for Total Revenue, Marginal Revenue, Average Total Cost and Marginal Cost. 2. What is the profit maximizing output and price for this firm? Provide respond in detail with illustrations as needed. 3. If this firm operates at its
(a)Prove that the long-run cost function is the envelope of short-run cost functions. (b) Characterize the long-run equilibrium of a perfectly competitive industry in which average costs rise as output increases, under both restricted and free entry.
Profit Maximization and Producer Surplus. Please show all your work. 1) Consider a competitive market in which the market demand curve for microwave ovens is expressed as: P = 1000 - 5Q And the supply of microwave ovens is expressed as: P = 100 + Q Where P is the price per unit and Q is the total number of micr
Please show all work and diagrams if necessary. 1) In the initial videocassette market (home use), there were two competing standards: Sony's Betamax and the VHS standard. Using hypothetical payoffs, we can analyze how both manufacturers can benefit from cooperation rather than competition. The following lists the payoff
-------------------------------------------------------------------------------- If the monetary authority wants to stimulate an economy in a recession, it often reduces interest rates, and if the inflation rate is low, as it has been in the early part of the current decade, these interest rates can become very low. How effecti
1. Can you illustrate by using supply and demand graphs what happens to the equilibrium price and quantity in each of the following situations. Please dont forget to label the graphs. a. A rise in the price of tea on the market for coffee. b.Expectations of higher prices on the market for housing. c.A decline in the price o
Read the following summary of a Wall Street Journal article by Scott Thurm that appeared on 14 October 2004, entitled, "Costly Memories: Tivo, iPod, and X-Box: An Industry Struggles for Profits," and use this information to answers questions 1 & 2: SUMMARY: The TiVo video recorder, the iPod music player and the Xbox game ma
Industry structure is often measured by computing the Four-Firm Concentration Ratio. Suppose you have an industry with 20 firms and the CR is 30%. How would I describe this industry? Suppose the demand for the product rises and pushes up the price for the good. What long-run adjustments would I expect following this change in de
A number of stores offer film developing as a service to their customers. Suppose that each store offering this service has a cost function C(q) = 50 + 0.5q + 0.08q2 and a marginal cost MC = 0.5 + 0.16q. Q: If the going rate for developing a roll of film is $8.50, is the industry in long-run equilibrium? If not, find the p
Suppose you are given the following information about a particular industry: QD = 6500 - 100P Market Demand QS = 1200P Market Supply C(q) = 722 + q2/200 Firm total cost function MC(q) = 2q/200 Firm marginal cost function Assume that all firms are identical and that the market is characterized by p
Can you please show me the step by step solutions to #2. I have attached the answer key to the practice quesstions. Please provide comprehensive/correct answers. I ONLY need help with #2(Hemlock Bush problem).
Homer and Marge are playing the attached simultaneous-move, one-shot game. (a) Does either player have a strictly dominant strategy? (b) What is the solution to this game? Is the solution a Nash equilibrium? (c) Suppose that this simultaneous-move game is modeled as a sequential-move game with Homer moving first. Illustrate
1. Interferences such as rent controls and farm price supports reduce the efficiency of markets. In terms of the balance of Qd and Qs, how/why do they do this? Draw a supply & demand graph (or graphs) to illustrate your answer. 2. What is consumers surplus? Why does it exist? Why is consumers surplus at a maximum when the
Dear Sir: I am preparing for the Clep test and I am studying out of a book from the library. However, there are no answers so that I can see if I am on the right track. Can you please assist me witht he following questions? 1. If marginal cost is less than average cost, average cost must fall when more units are produc
I'm confused on a concept and I have a test coming up, so I need a bit of help on a discussion I had in class today about profit maximization I don't fully understand... Given a situation (discussed in class today) in a monopolistically competitive market (NOT a monopoly), if my price is $10 for an item and at my present rate
Suppose Microsoft can produce a new sophisticated software product. However, it wants to do so only if Intel produces high-speed microprocessors. Otherwise, the software will not sell. Intel, in turn, wants to produce high-speed microprocessors only if there is popular software on the market that requires high-speed processin
Just answers the questions below using some economic concepts. 1.) Discuss an example of supply and/or demand that you have observed in the real world. Be don't use the example for the questions below, use something else. 2.)I was thinking about the gas prices, in a way it has to do with supply and demand, right? Because
1) An imperfectly competitive firm has the following demand and cost functions: P=230-20Q C=50+30Q a. What is optimum output? b. What is equilibrium price of this output per unit? c. What is optimal revenue? d. What is total profit? 2) A firm in a perfectly-competitive industry where market price of output prevailing
I am attaching the problem. You can solve it in the same document. 1. What are the 3 condition for Short Run profit maximization in Monopoly? 2. What are the 3 condition for Short Run profit maximization in Monopolistic competition? 3. What are the 3 condition for Short Run profit maximization in oilgopol
In the Keynesian cross, assume that the consumption function is given by C = 200 + .9 (Y-T). Planned investment is 100; government purchases and taxes are both 100. a. Graph planned expenditure as a function of income. b. What is the equilibrium level of income? c. If government purchases increase to 125, what is the
11. Economies of scale: a. means that per unit costs decrease as output increases in the long run. b. are caused by loss of team spirit as a firm expands in size. c. is the result of mismeasurement of opportunity costs. d. occur when per unit costs increase as one input is added to production. 12. Kellogg's, the bre
1.1 2Demand A manufacturer faces a downward-sloping demand curve for her product: Q = 300 - 2P (demand) (a)What is the equation for the inverse demand curve? () (b)What is the choke price? () (c)What is the equation for the marginal revenue curve? () (d)At what price and quantity are total revenues maximize