3. According to the textbook, which of the following statements about drug interdiction is (are) correct? (x) Higher drug prices caused by drug interdiction policies may cause an increase in drug-related crime because drug addicts would have a greater need for quick cash. (y) Drug interdiction shifts the supply curve of drugs to the left, and, as a result, raises prices and total revenue in the drug market. (z) Advocates of drug interdiction argue that higher drug prices caused by such policies may discourage drug experimentation by young people. A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only E. (y) only

3. According to the textbook, which of the following statements about drug interdiction is (are) correct? (x) Higher drug prices caused by drug interdiction policies may cause an increase in drug-related crime because drug addicts would have a greater need for quick cash. (y) Drug interdiction shifts the supply curve of drugs to the left, and, as a result, raises prices and total revenue in the drug market. (z) Advocates of drug interdiction argue that higher drug prices caused by such policies may discourage drug experimentation by young people. A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only E. (y) only

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(Figure: Pharmaceutical Pills Sales I) A pharmaceutical company sells its pills in foreign and domestic markets. Domestic Market Foreign Market Price ($) 20 Price ($) 20 18 18 16 16 14 14 12 12 10 10 8 8 6 6 MC MC 4 4 2 MR 2 D MR D 0 0 2 4 6 8 10 12 2 4 6 8 10 12 Quantity Quantity Suppose the company must charge the same price in each market. The profit-maximizing price is $ ○ 12 ○ 8.67 7.67 ○ 7.00
You are working trying to estimate the proper price to charge a market for the firm that sells beer in Lancaster Pennsylvania. They estimated that the demand curve for the market is Quantity demanded=20-2P. The firm currently prices the good at 8 dollars. They want to move the price to 6 dollars in a attempt to increase profits. 1) What is the elasticity for this move in price (Use the midpoint method for elasticity) make sure you show your work? 2) Now you are contacted by a different branch of this company that is in a lower priced (Scranton P.A.) market with the same demand curve. They want to move the price from 2 to 5 dollars. What is the elasticity of this change (Use the midpoint method)? 3) Now suppose you find out that there is a similar product that impacts the Quantity demanded for a product. The relationship is Qd=15+Pb. Now suppose the price (Pb) of the other good is 5 and goes to 6. What is the Cross-price elasticity of the good?
Budweiser and Heineken: % change in demand for Budweiser = 40% % change in price of Heineken = 10% Refer to the following information above regarding two goods. Based on the cross-price elasticity of the two goods would regulators consider the goods to be in the same market? Yes, because the cross price elasticity is 4, which means the goods are considered to be complements in the same market. Yes, because the cross price elasticity is 4, which means the goods are considered to be substitutes in the same market. Yes, because the cross price elasticity is 4, which means the goods are not considered to be substitutes in the same market. No, because the cross price elasticity is 4, which means the goods are not considered to be substitutes in the same market.
6.
urgent Question 3.Assume that a Swiss drug company holds the patent on a malaria medicine that has no closesubstitutes. If it charges the same price in every country where it sells this medicine, a price thatwill maximize its profits, that price will exceed what the vast majority of consumers in twentylower-income countries can afford to pay.a) Illustrate this situation using supply and demand curves.b) Use supply and demand curves to show how the Swiss company can sell at different prices ineach country and make a profit in each. Identify on the curves the profit the Swiss companymakes in a typical poorer country, and the profit it makes in a wealthier country.c) What condition is necessary for the Swiss company to be able to follow this strategy?
6. The cartel Consider a town in which only two residents, Rajiv and Simone, own wells that produce water safe for drinking. Rajiv and Simone can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. Price (Dollars per gallon) 6.00 Quantity Demanded Total Revenue (Gallons of water) (Dollars) 0 0 5.50 45 247.50 5.00 90 450.00 4.50 135 607.50 4.00 180 720.00 3.50 225 787.50 3.00 270 810.00 2.50 315 787.50 2.00 360 720.00 1.50 405 607.50 1.00 450 450.00 0.50 495 247.50 0 540 0 Suppose Rajiv and Simone form a cartel and behave as a monopolist. The profit-maximizing price is $ per gallon, and the total output is gallons. As part of their cartel agreement, Rajiv and Simone agree to split production equally. Therefore, Rajiv's profit is $ and Simone's profit is $ Suppose that Rajiv and Simone have been successfully operating as a cartel. They each charge the monopoly price and sell half of…
5. Indicate whether each of the following statements is true or false, and explain your answer.A. If a monoplist is producing a level of output at which demand is inelastic, the firm is not maximizing profits and increasing output will decrease total revenu.B. When a monopolist maximizes profits, the price is greater than the marginal cost of producing the output. This means that consumers are willing to pay more for additional units of the product than these additional units of the produce. Thus, the monopolist should produce and sell addional units of output.C.A monopolistically competitive firm produces a level of output at which price equals $80, marginal revenue equals $40, average total cost equals $100, marginal cost equals $40 , and average fixed cost equals $10. To maximize profit, the firm should produce a smaller output and sell it at a higher price.D. In a monopolistically competitive market, a firm has market power because it produces a differentiated product. This means…
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4 In order to price-discriminate, a firm must be able to separate its customers who have different elasticities of demand. A firm can earn. more revenue by charging higher prices to consumers with relatively inelastic demand, and lower prices to consumers with relatively elastic demand. Consider the different customers listed below. Which ones have relatively inelastic demand, and which ones have relatively elastic demand? Items (4 items) (Drag and drop into the appropriate area below) Jordan goes to an out-of-state university. Categories The Jones family travels for a vacation. Robert goes to a matinee movie. Relatively elastic Drag and drop here Jerry buys multiple items (soda, popcorn, candy) from the concession stand at a movie theater. Relatively inelastic Drag and drop here
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