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General Equilibrium

In the following problem you need to determine whether a threat by an incumbent firm is credible and if it will deter a would be entrant, establish a way to make the threat be made credible, and demonstrate the process of backward induction to find an equilibrium.

Maytag wants to prevent Whirlpool from entering the market for high priced, front load washing machines. Front load washing machines clean clothes better and use less water than conventional top load machines. Even though front load machines are more costly to manufacture than top loaders, Maytag is nonetheless earning economi

Dominant Strategy

Some games of strategy are cooperative. One example is deciding which side of the road to drive on. It doesn't matter which side it is, as long as everyone chooses the same side. Otherwise, everyone may get hurt. Please see attach file for the rest of the problem.

Profit maximization

Given the following Demand & Supply functions: Qd = 25 – P Qs = 10 + 2P a – What is the equilibrium values of P and Q? Now suppose the demand function changes to: Qd = 10,000 – 2P If Total Cost function is: TC = 5000 + 50Q b - Find the Profit – maximizing Quantity and Price. c – Find the firm’s profit

Demand and supply relationships

The following equations describe the demand and supply relationships for fragles: Qd = 189 -2.25P Qs = 124 + 1.5P a. What is the equilibrium price and quantity? b. The Agriculture Department sets a minimum price of $25.00 a pound. Will there be a surplus or a shortage? What will be the quantity demanded and the quantity s

Perfect competition and economic profits

1. Briefly state the basic characteristics of purely competitive market (PC market). 2. Explain how each firm in PC market earns zero economic profit (normal profit) in the long run.

Graphing Pizza Demand

Consider the market for pizza. Suppose that the market demand for pizza is given by the equation Qd = 300 - 20Pd and the market supply for pizza is given by the equation Qs = 20Ps - 100, Qd = quantity demanded, Qs = quantity supplied, Pd = price consumers pay (per pizza). a. Graph the supply and demand schedules for pizza usi

Akerlof model

Player 1 first observes the quality (q) of the indivisible good he owns before proposing a price (p) at which he will sell the good to Player 2, who responds to the offer by either accepting or rejecting. Trade takes place at a price of p if Player 2 accepts; otherwise no trade takes place. Player 1's payoff equals the reven

IS and LM Equations

Consider the following numerical version of the IS-LM model in a closed economy: C-400+0.5Yd; I=700-4000r+0.1Y; G=200; Tp=200; Yd=Y-Tp, RLMD=.5Y-7500r; RLMS=500; X=M Find the equations for the IS Curve and LM Curve Also, find equilibrium real output (Y), interest rate (r), consumption (C), and Investment (I). Please

Cournot Equilibrium, Monopoly, Duopoly

Let there be 3 identical firms in an indusrty. The inverse demand curve is given by P=1-Q where Q= q1+q2+q3. The marginal cost for each is zero. a) Compute the Cournot equilibrium. b) Show that if two of the three firms merge (transforming the industry to a duopoly) the profit of these firms decrease. c) What happen

Managerial Economics

Currently 10 identical bakeries are producing bread in a competitive market. The cost function for a typical bakery is: Ci = 6qi + 0.01qi2 + 100. The demand for bread is: q = 1800 - 100p (a) What is the short run market supply curve? (b) What will be the equilibri

Determining long run equilibrium output

A perfectly competitive constant cost industry contains a number of firms, each of which has the following long-run total cost function, where q is annual output: TC = 0.01q3 - 1.2q2 + 111q The market demand curve for the product is: Q = 5,800 - 20p where Q is annual industry sales. (a) Calculate the long-run equilibr

Managerial Economics

Fifteen competitive gadget makers each have the following cost structure: Ci = 0.1qi2 + 2qi + 160 i = 1,2,3.....15 (a) Determine the average fixed, average variable, average total and marginal cost functions. (b) What is the short-run supply curve for each firm? (c) What is the market supp

Managerial Economics

Q1. Ten competitive sawmills currently supply lumber to a market whose demand q, depends on lumber price, p, as follows: q = 3550 - 350p. The cost function of each mill is identical: Ci = 5qi + 0.05qi2 + 80 i = 1........10 (a) Determine

Fixed costs, Equilbrium price and quantity

1 - Florence is considering going into business for herself and has developed the following estimates of monthly costs and revenues to aid her in her decision-making process. She has decided to house the business in a building that she already owns, although she could rent the building to someone else for $1,000 per month. Estim

Effect of Increased Demand of Corn on Prices

Ethanol is again viewes as one part of solution to the petroleum products. Ethanol is made from a blend of gasoline and alcohol derived from corn. What would you expect the impact of this program to be on price of corn, soybeans and wheat.

Determining equilibrium price and quantity for pears

The supply and demand curves for pears are Qs = 10000P QD = 25000-15000P Where Qs is the quantity (tons) supplied, Qd is the quantity (tons) demanded, and P is the price per pear (in hundreds of dollars per ton). a.Plot the supply and demand curve b.What is the equilibrium price? c.What is the equilibrium quantity?

Profit Maximizing Use the demand function: P = 30 - 2Q And the marginal cost function: MC = 20 to determine P and Q for profit maximization. Then, suppose a government subsidy of $6 per unit is imposed. What does the firm do with respect to price and quantity?

For Firm Y: Use the demand function: P = 30 - 2Q And the marginal cost function: MC = 20 to determine P and Q for profit maximization. Then, suppose a government subsidy of $6 per unit is imposed. What does the firm do with respect to price and quantity?

Graphical solution for economic profit and loss for a firm

I semi understand the concepts of the questions but not how to show the work. Graphs have been attached. PROBLEM 3. a. Determine whether the typical firms depicted below are earning profits or losses then show graphically how economic forces will cause the industry to move to a zero economic profit for the typical firm. B

Unionization

Consider a tropical island economy with two sectors, souvenir manufacturing and hospitality (hotels). Both sectors are perfectly competitive, and workers are equally able and willing to work in either industry. Only foreign tourists demand souvenirs and hotel stays, so changes in the domestic labor market do not affect the produ

Managing in Monopolistic, and Monopolistically Competitve markets

You are the manager of a small US firm that sells nails in a competitive US market (the nails you sell are a standardized commodity, and are identical to those available from hundreds of other suppliers). You are concerned about two things you recently read (1) the overall market supply of nails will decrease by 2% due to exit

Cournot and Bertrand Equilibrium

Assume that Smith Inc. and Wang, Inc. compete in an oligopolistic setting. They produce a homogeneous product and face the following industry demand curve: P = 20 - .01Q Where Q = Q1 + Q2 a. Each firm faces a marginal cost of $10. Find the equilibrium quantity produced by each firm in the Cournot equilibrium. What

Demand supply curves, Implicit and explicit costs

Please see the attached file for complete Problems. Work done with the help of equation writer may not print here. 1.Less is a computer programmer who earned $35,000 in 1999. But with the new millennium, Lee decided to try a new career. He loves water sports, and in 2000 he opened a body board manufacturing business. At