If market share for five cleaning service companies are 8%, 13%, 6%, 25%, and 48%, the Herfindahl-Herschman (HHI) index would be 3198 2304 0100
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- Industry A is composed of three firms. One has an 80% market share, and the other two have a 10% share each. The Herfindahl index for this industry is:Two competing companies, A and B face the same unit cost of a product that is fixed and equal to 15 monetary units. The demand function for company A's product is Pa=65-2.5Qa and for B's product is Pb=60-2Qb.Calculate the Lerner index at the equilibrium position of each company. Comparing the index you found for company A with the index you found for company B what is found? If there is a difference between them, explain why it is due.ABC, Inc. produces a special stem cell safety container in a monopolistically competitive market. The market is restricted to stem cell researchers and a few large medical agencies (e.g., Department of Health). The company has profitably exploited its market niche. However, the XYZ Company could enter into the market. The following market demand and cost information has been developed: P = $3000-$0.25Q, MR = ƏTR/ƏQ = $350 - $4.4Q, %3D TC = $1950 + $7.5Q2 + $6.5Q MC = ƏTC/aQ = $14 + $4Q, where P is price, Q is units measured by the number of containers, MR is marginal revenue, TC is total costs including a normal rate of return, MC is marginal cost, and all figures are in dollars. Assume that demand and cost data are descriptive of ABC's historical experience. If ABC wants to maximize their profit before XYZ enters the market, what would the following amounts be for: a. Price: P = $Answer b. Output (or Quantity): Q = Answer units c. Total Cost: TC = $Answer d. Economic Profits Earned: N…
- The price/demand function of a company is p=36-0.001D and the cost function is 20D+1000. Determine the following: 1. The optimal demand = Blank 1 units 2. The optimal value = $ Blank 2 3. The demand that will give the highest revenue = Blank 3 units 4. The highest revenue value = $ Blank 4 5. Breakeven Points = Blank 5 and Blank 6 units 6. Range of Profitability = From Blank 7 to Blank 8 unitsYou are an analyst for De Boers, the monopoly producer of diamonds. You are given the following market information: P = -4Qp + 76 P = 8Qs + 10 %3D TC = 40 + 15Q² MC = 30Q %3D %3DOC makes and sells an executive game for two distinct markets in which it currently has a monopoly. The fixed costs of production per month are $20,000, and variable costs per unit produced, and sold, are $40. The monthly sales can be thought of as X, where X = X1 + X2, with X1 and X2 denoting monthly sales in their respective markets. Detailed market research has revealed the demand functions in the markets to be as follows, with prices shown as P1 and P2: Market 1: P1 = 55 - 0.05X1 Market 2: P2 = 200 - 0.2X2 The management accountant believes there should be price discrimination; the price is currently $50 per game in either market. Required: a) What is the optimum price to charge in Market 1? b) What is the optimum quantity to produce in Market 2? c) The following statements have been made about price discrimination: 1) Price discrimination should be used if a business wishes to discourage new entrants into a market. 2) Price discrimination can be difficult to implement in…
- Firm X is going to apply a 2nd degree price discrimination. They plan to charge P1 for the first units and P2 for the subsequent units. The inverse market demand curve is P=100 – 2q, and the total cost function is TC = 10q + 100. Answer the following questions: %3D - 5. the prices (P1 & P2) the firm is going to charge after applying 2nd degree price discrimination are: O P1=70 and P2=40 O P1=40 and P2=70 O P1=20 and P2-40 O P1=60 and P2-30An industry has the following market shares: 30% 20% 10% 5% What is the Pre-merger index? What is the post-merger index? What is the increase or decrease in the index after the merger? Should a merger between the 1st and 3rd largest firms be allowed based on the Herfindhal Index? Why or why notA monopolist faces a demand curve described by p(g) = 100-2g and has constant marginal costs of 16 and zero fixed costs. If this monopolist is able to practice perfect price discrimination, its total profits will be: (a) 1,092 O (b) 2,646 O (c) 882 O (d) 1,764
- Marryweather Ltd. is a company that sells machines in the US and the EU. The inverse demand functions for the two markets are given as Pus = 10 – Yus and pgu = 6 - Yev. respectively. The machines for both markets are manufactured in Poland with a fixed % marginal cost of $2 and sold to clients only through its online retail stores (assume the online stores are affiliates of the company and that the profits are directly recorded by Marryweather, Ltd.). Due to its unique patented technology, the company is a monopoly in both markets. 1. Assume, instead of the exclusive territorial agreements, Marryweather, Ltd. has one global retail agreement with its online vendor that sells to both markets. Drawing a diagram (with the proper labels) show the combined market demand and marginal revenue. What is the price? What is the total profit? How many machines does the company sell in each market? 2. If Marryweather, Ltd. could perfectly price discriminate in the combined market from part (b), what…There are two ma jor producers of corncob pipes in the world, both located in Herman, Missouri. Suppose that the inverse demand function for comcob pipes is described by p = 120 4q where q is total industry output and suppose that marginal costs are zero. What is the Cournot reaction function of firm 1 to the output, q2, of firm 2? (a) 120-4q22Edinburgh Tyre Company (ETC) sells identical tyres under the firm's own brand name and private label tyres to discount stores. The tyres sold in both sub-markets are identical, and the marginal cost is constant at £10 per tyre for both types. The firm has estimated the following demand curves for each of the markets. PB 70 0.0005QB (brand name) and PP 20-0.0002QP (private label). Quantities are measured in thousands per month and price refers to the wholesale price in pounds. ETC currently sells brand name tyres at a wholesale price of £28.50 and private label tyres at a wholesale price of £14. Which of the following statements is true? Select one: O a. O b. ○ c. The brand name price is too low and the private label price too high relative to the profit maximising prices. Both prices are too high relative to the profit maximising prices. Both prices are too low relative to the profit maximising prices. Od. The brand name price is too high and the private label price too low relative to…