Regulators in the European Union have charged Microsoft with illegally tying Internet Explorer (IE) toWindows and mandated that a version of Windows be offered stripped of IE. A news report suggestedthat when Microsoft launches Windows 7, it will charge a higher price for the IE-stripped version thanthe price for a full version that includes IE. Microsoft denied this report but announced that it would offerthe full version of Windows 7 at a lower upgrade price.Source: computerworld.com 1. Suppose that the restaurant industry is perfectly competitive. Joe's Diner is always packed in theevening but rarely has a customer at lunchtime. Why doesn't Joe's Diner close-temporarily shut down-at lunchtime?

In the short run, if firm manages to charge the price, atleast higher than average variable cost,…

1. Suppose that the restaurant industry is perfectly competitive. Joe's Diner is always packed in the evening but rarely has a customer at lunchtime. Why doesn't Joe's Diner close-temporarily shut down- at lunchtime?

1. Suppose that the restaurant industry is perfectly competitive. Joe's Diner is always packed in the evening but rarely has a customer at lunchtime. Why doesn't Joe's Diner close-temporarily shut down- at lunchtime?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The cost data in the following table are for Marshall’s Meats, a perfectly competitive firm. Round your answers to 2 decimal places. Output Average Variable Cost AverageTotal Cost MarginalCost Total Cost 0 / / / $ 95 1 $ $ $ 115 2 125 3 150 4 200 5 270 6 350 7 450 a. Complete above the table. b. What is the break-even price? Break-even price: $ c. What is the shutdown price? Shutdown price: $ d. If the market price of the product is $50, what quantity will Marshall’s Meats produce? What will be its profit or loss? Quantity: ; : $ e. If the market price of the product is $100, what quantity will Marshall’s Meats produce? What will be its profit or loss? Quantity: ; : $
1. Define market power and explain why firms in a perfectly competitive market have none.
Crabby Bob’s is a seafood restaurant in a beach resort in Delaware. Crabby Bob’s earns a profit each month from May through September, suffers losses in October, November, and April but remains open, and remains closed from December through March. Given that the restaurant market in this town is perfectly competitive, how would you explain Crabby Bob’s decisions?
3. The components of marginal revenue Sean's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Sean produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Sean faces. As you can see, to sell the additional engine, Sean must lower his price from $80,000 to $60,000 per fire engine. Note that while Sean gains revenue from the additional engine he sells, he also loses revenue from the initial eight engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $60,000 rather than $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $60,000. PRICE (Thousands of dollars per fire engine) Sean 100 90 80 70 40 10 ++ 0 0 1 True + 2 False 3 4 5 QUANTITY…
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Gg.227.
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