The following problem is proposed: World Airlines is thinking of buying a new plane for its shuttle service. Why does the economist's notion of cost suggest that World Airlines should consider the plane's price in deciding whether it is a profitable investment but that, once bought, the plane's price is not directly relevant
Monopoly and Monopolistic Competition DQ1. There are four firms in an industry with the following market shares: Firm 1 30% Firm 2 25% Firm 3 25% Firm 4 20% a) Calculate the Herfindahl Hirschman Index for the industry. b) What is the number of effective competitors in this market? Show your calc
Assignment 1 Cost Data (Excel application) 1. Consider a firm that has just built a plant, which cost $20,000. Each worker costs $5.00 per hour. Based on this information and using Excel, fill in the missing information in the table below. Number of Worker Hours Output Marginal Product Fixed Cost Variable Cost To
Consider a firm that has just built a small plant, which cost $4,000. Each unit requires $2.00 worth of materials. Each worker costs $7.00 per hour. Based on this information and using Excel, fill in the missing information in the table below. Number of worker hours Output Fixed Cost TVC TC MC A
Explain why the demand curve facing a perfectly competitive firm is assumed to be perfectly elastic? (i.e. horizontal at the going market price). Just 1 or 2 sentences needed.
Considering companies operate in their own self interest, should cartels be legal? Defend your position using economic principles. Are there economic policies available to break a cartel? If so, what are they?
You have an: Los Angeles and Brooklyn. You produce all the jerseys in a single factory located in Seattle. Your total cost function associated with producing the baseball jerseys is c(Q)=Q2+400 where q is the total amount of jerseys you produce. The inverse demand function for your jerseys in Los Angeles is PLA(QLA)=60-QLA where
A. Suppose the following was overheard at the water cooler: â??I think our company should take advantage of economies of scale by increasing our output, thereby spreading out our overhead costs.â? b. Would you agree with this statement (assuming this person is not your boss)? Why or why not? Explain.
An American company that sells consumer electronics products has manufacturing facilities in Mexico, taiwan & Canada. The average hourly wage, output, & annual overhead cost for each site are as follows: Mexico Taiwan Canada Hourly Wage Rate
Suppose the demand curve for a monopolist is Qd=500-P, and the marginal revenue function is MR=500-2Q. The firm has a marginal and average total cost of $50per unit. 1) Find the firm's profit maximizing output and price. 2) Calculate the firm's profit 3) What is the Lerner Index
A firm uses a single with costs C=160+16Q+.1QxQ and faces the price equation P=96-.4Q. a. Find the firmâ??s maximizing price and quantity. What is its profit? b. Find the firmâ??s production manager claims that the firmâ??s average cost of production is minimized at a output of 40 units. Furthermore, she that 40 units is t
Suppose you are a monopolist operating two different plants at different locations. Both plants produce the same product; Qsub1 is the quantity produced at plant 1 and Qsub2 is the quantity produced at plant 2. We face the inverse demand function of : P=500-2Qsubm, where Qsubm is the market demand. The cost functions for the tw
Optimal pricing strategy varies significantly across different market structures. The pricing guidelines in a monopoly market are relatively straightforward. Since the company is the only producer offering the product, it can mark-up the price as far as the customer can bear. The pricing strategies for a producer operating in a perfect competition structure are also fairly intuitive. They are price takers, and hence price is set at the marginal cost of the product. This is due to the fact that there are many firms offering nearly identical products. However, there is optimal pricing for the market structures offering differentiated products with many competitors (oligopoly) or a few producers (monopolistic competition). These are much more complex and involved. It has been stated that differentiation in products that creates differences in customer valuation is the most prevalent type of competition.
Optimal pricing strategy varies significantly across different market structures. The pricing guidelines in a monopoly market are relatively straightforward. Since the company is the only producer offering the product, it can mark-up the price as far as the customer can bear. The pricing strategies for a producer operating in a
Honda uses flexible plants in the manufacturing of its cars. Discuss whether this method of production results in optimum output.
I am not good with excel and formulas. ABC Waterhouse's free cash flow next year will be $250 million and it is widely expected to grow at a 5 percent annual rate indefinitely. The company's weighted average cost of capital is 11 percent, the market value of its liabilities is $2.5 billion, and it has 32 million shares ou
Assume that two companies (A and B) are duopolists who produce identical products. Demand for the products is given by the following linear demand function: P = 200 - QA - QB where QA and QB are the quantities sold by the respective firms and P is the selling price. Total Cost functions for the two companies are TC
Could you please provide with an example of realistic for the following theme: 1- Price competition and the prisoners' dilemma 2- Cartel cheating Both examples should quote from internet NOTE: The amount of words is not highly important, brief of the examples and a links guide me to the full examples is sufficient.
A perfectly competitive firm has a MPL = 22-L. If P = 5 and w = $10/hr: (a) What is the optimal quantity of labor demanded? (b) Given these circumstances, how can the firm and the employee avoid outsourcing? (c) How does the "slacker" or "lazy" worker compound the other workers problems? This answer relates to the n
Please help with Problems 1, 4, 5, 9, 10, and 13 on pp. 605-606. See the attached file.
Two firms, ABC, Inc and XYZ, Co. produce video systems. The industry demand function for video systems is P = 100 - 2 (Q1 + Q2), where Q2 is the output for ABC, Inc. and Q2 is the output for XYZ, Co. The total cost function are TCa = 50 + 80Qa and TCb = 60 +90Qb, respectively. a. If each firm sets its output to maximize it
The demand for homes in Honolulu is shown in the attachment. Real estate agents in Honolulu find the demand for homes are influenced by three factors, namely: the price of the home, the interest rate on mortgage, and the per capital income of the homeowners. 1. Assess the goodness of fit 2. Interpret the results
11. The inverse demand curve for a Stackelberg duopoly is . The leader's cost structure is . The follower's cost structure is . a. Determine the reaction function for the follower. b. Determine the equilibrium output levels for both the leader and the follower. c. What are the profits for the leader? For the follower?
ABC, Inc. estimates the demand function for its product to be P = 28 - 0.14Q, where P is price and Q is output in thousands of units. The board of directors concludes that the firm should attempt in the near term to increase its total revenue, even if it means lower profit. (Please show work) a. What output should the
A firm's costs can be divided into fixed costs and variable costs. Identify each of the following as either a fixed or variable cost. Then, identify that same costs as being an explicit cost or an implicit cost. Give the rationale for each of your answers. Labor costs Materials costs Entrepreneur's profit Gasoline use
Question 1 Monopolistically competitive firms: A .can earn economic profits or losses in both the short-run and the long-run. B. can earn either profits or losses in the short-run, but earn zero economic profits in the long-run. C. earn economic profits in the short-run but zero economic profits in the long-run. D. ea
A competitive firm estimates its average variable cost function to be . AVC=125-.21Q+.0007Q^2(squared) The firm's total fixed cost is $3,500. a. The marginal cost function associated with this average variable cost function is SMC =__________________________. b. AVC reaches its minimum at ______ units of output. Minimum AVC
Two local ready-mix cement manufacturers, Here and There, have combined demand given by Q = 105 - P. Their total costs are given by TCHere = 5QHere + 0.5Q2Here and TCThere = 5QThere + 0.5Q2Here. If they cannot successfully collude and instead produce where the market price equals marginal cost, their total output will be
John is considering opening a shop to make desks. He estimates the cost information for the first-through-the-ninth desk (nine is his estimated maximum monthly output). The first desk costs $520 to produce, including $380 in overhead expenses. The price of the desk has been set at $199. The additional desk have the fol
Suppose the long-run costs for ABC, Inc is represented by the following function: TC = 28,400,300 + 460,200Q, where C is total cost in dollars and Q is the number of products. (Show work) A. If Q = 500, what is average total cost? B. What is the marginal cost? C. If Q = 200, what is the average total cost? D.
When one automaker begins offering low cost financing or rebates, others tend to do the same. What two oligopoly models might offer an explanation of this behavior? my answer: I think the two types of oligopoly models are the Game theory model and Kinked Demand Curve. Because we know their will always be a demand for cars, b