1.) Model Management and Extreme Makeover In the model - management industry, firms supply human models for advertisements. Models are positioned at triangles and vary in skin color, which is measured on a line of unit length. Skin color can be modified with makeup, and the makeup costs are incurred by the firm. Each firm enters the market at an address on the color line, and each firm manages two models. Suppose the cost of an extreme makeover (the cost of going from one end of the color line to the other) is $90. Illustrate two equilibria with graph and determine of makeup cost in (i) a city with 4 model (2 firms) - (ii) a city with 6 models (3 firms), including values for the makeup cost per model.

1.) Model Management and Extreme Makeover In the model - management industry, firms supply human models for advertisements. Models are positioned at triangles and vary in skin color, which is measured on a line of unit length. Skin color can be modified with makeup, and the makeup costs are incurred by the firm. Each firm enters the market at an address on the color line, and each firm manages two models. Suppose the cost of an extreme makeover (the cost of going from one end of the color line to the other) is $90. Illustrate two equilibria with graph and determine of makeup cost in (i) a city with 4 model (2 firms) - (ii) a city with 6 models (3 firms), including values for the makeup cost per model.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter13: best-practice Tactics: Game Theory

Section: Chapter Questions

Problem 1E

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) Model Management and Extreme Makeover In the model-management industry, firms supply human models for advertisements. Models are positioned at triangles and vary in skin color, which is measured on a line of unit length. Skin color can be modified with makeup, and the makeup costs are incurred by the firm. Each firm enters the market at an address on the color line, and each firm manages two models. Suppose the cost of an extreme makeover (the cost of going from one end of the color line to the other) is $90. Illustrate two equilibria with graph and determine of makeup cost in (i) a city with 4 model (2 firms) (ii) a city with 6 models (3 firms), including values for the makeup cost per model.
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Pizzaroni Cafe on the boardwalk in a popular New Jersey seaside town owned by Angelo McDonald. Situation: Due to the booming tourist season and the exceptional meals he prepares, Angelo is frequently forced to turn away patrons because he does not have enough room to accommodate everyone or because he does not have enough servers and kitchen help, especially on Friday and Saturday nights. Currently, the Pizzaroni Cafe has several pinball and video games that are barely earning enough to pay their monthly rental fees. Angelo brags that the tables in his establishment are exceptionally roomy and have large areas of space in- between tables. Chuck’s Hoagie House, the eating establishment alongside of him in the same building has difficulty attracting patrons due to a rumor that several customers contracted food poisoning last September at his establishment. A) What possible options are available to Angelo to increase the number of patrons he can serve in the short run in an effort to…
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5. Foreign direct investment versus licensing Giocattolo is a profit-maximizing firm producing toy cars-a capital-intensive good-which are sold in its home country, Italy, and abroad in Spain. Giocattolo chose foreign production as a method of penetrating the Spanish market and has to decide whether it is more efficient to directly invest in Spain to establish a production subsidiary or to license the technology to a Spanish firm to produce its goods. On the following graph, AVC Spain is the average variable cost curve of a Spanish firm producing toy cars. (This curve represents costs such as labor and materials.) The curve ATC subsidiary represents the total unit costs Giocattolo will face if it establishes a subsidiary in Spain. PER-UNIT COST (Dollars) 10 9 8 2 1 0 0 15 ATC Subsidiary + 105 30 45 60 75 90 PRODUCT (Thousands) 120 AVC Spain + 135 150 ?
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