"Limits to arbitrage" is suggested as an impediment to achieving the perfect markets needed, in part, to satisfy the EMH. We know arbitrage takes at least two forms, "pure" and "quasi." In the lecture example, when using quasi arbitrage, Shirley invests some of her own money to complete the trade,
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"Limits to arbitrage" is suggested as an impediment to achieving the perfect markets needed, in part, to satisfy the EMH. We know arbitrage takes at least two forms, "pure" and "quasi." In the lecture example, when using quasi arbitrage, Shirley invests some of her own money to complete the trade,
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- Oftentimes, when somebody makes a purchase, it comes as a result of viewing an advertisement from a retailer. Here is an example of an advertisement from a car retailer: "Come on down to Toyota of Lancaster. We have one Toyota Corolla left for sale at $21,000 (VIN: 123456789)." State whether you believe the aforementioned quote from the advertisement would constitute an offer. If it is an offer, why? If not, why?38. On January 7, Scott sends a letter to Aaron offering to sell his Xbox video game system for $50. On January 10, Aaron mails a letter of acceptance. On January 11, prior to receiving Aaron's letter, Scott faxes a letter to Aaron revoking his offer to sell his Xbox. As to the letters sent by Scott and Aaron: Aaron's letter is merely a counter-offer and Scott has the power to revoke. b. a. Scott's revocation is valid, no contract exists. Aaron's acceptance is effective upon dispatch and a valid contract exists. no contract because this contract must be in writing. C. "PJoe has just moved to a small town with only one golf course, the Northlands Golf Club. His inverse demand function is p = 140-2q, where q is the number of rounds of golf that he plays per year. The manager of the Northlands Club negotiates separately with each person who joins the club and can therefore charge individual prices. This manager has a good idea of what Joe's demand curve is and offers Joe a special deal, where Joe pays an annual membership fee and can play as many rounds as he wants at $40, which is the marginal cost his round imposes on the Club. Joe marries Susan, who is also an enthusiastic golfer. Susan wants to join the Northlands Club. The manager believes that Susan's inverse demand curve is p = 120-2q. The manager has a policy of offering each member of a married couple the same two-part prices, so he offers them both a new deal. What two-part pricing deal maximizes the club's profit? Will this new pricing have a higher or lower access fee than in Joe's original…
- You are the manager of a train company. Recently total sales have been a bit low and you are now considering means to give sales a boost. Market research has shown that currently the price of train tickets is historically low. Market research has also shown that the demand curve for train tickets is downward sloping. You may assume that your company is not a price taker on the market. 1.One of your colleagues has suggested that it is important to lower the price of train tickets. In that case, she argues, the demand will increase. Do you agree with her? Explain why. 2.She continues her argument by concluding that if the demand goes up, the total value of sales of train tickets should therefore increase. Do you agree with her? Explain why.Monopoly: End of Chapter Problem 5. Firms use price discrimination to increase their profits by converting part or all of consumer surplus to producer surplus. Which of the following market conditions is not necessary for a firm to engage in price discrimination? O A firm must have the ability to prevent arbitrage. A firm must have the ability to separate consumers intoigroups based on their elasticities of demand. O A firm must have the ability to hide their prices from consumers. A firm must have some market power. Publisher: Worth Publishers 7:41 PM Question Source: Chiang 4e - Economics Principles For A Changing World 39°F A O 1 a I E 4) 23 12/12/2021 aJoe has just moved to a small town with only one golf course, the Northlands Golf Club. His inverse demand function is p=140-2q, where q is the number of rounds of golf that he plays per year. The manager of the Northlands Club negotiates separately with each person who joins the club and can therefore charge individual prices. This manager has a good idea of what Joe's demand curve is and offers Joe a special deal, where Joe pays an annual membership fee and can play as many rounds as he wants at $20, which is the marginal cost his round imposes on the Club. Joe marries Susan, who is also an enthusiastic golfer. Susan wants to join the Northlands Club. The manager believes that Susan's inverse demand curve is p=120-2q. The manager has a policy of offering each member of a married couple the same two-part prices, so he offers them both a new deal. What two-part pricing deal maximizes the club's profit? Will this new pricing have a higher or lower access fee than in Joe's original deal?…
- Jims diner is just about to open in memphis, tennessee. however, jim is trying to decide whether he wants to offer coke or pepsi soda products. he determines that, to offer either product, he will have to spend $1500 in sunk costs to purchase and install the appropriate paraphernalia. Ultimately, he chooses to offer coke products and agrees to pay coke 5 cents per ounce of coke sold for the right to use its product. After jim makes the investments specific to his soda choice, coke returns and asks for a fixed (One-time) fee in addition to 5 cents per ounce. What is the most jim should be willing to pay? explainQUESTION 21 (Table: GoGo Gas and Fanny's Fantastic Fuel) Use Table: GoGo Gas and Fanny's Fantastic Fuel. The table shows a payoff matrix for GoGo Gas and Fanny's Fantastic Fuel in a small town. Each firm can set either a high price or a low price, and customers view both gas stations as nearly perfect substitutes. Profits in each cell of the payoff matrix are given as (GoGo's profit, Fanny's profit). If each firm sets the price independently, the Nash equilibrium outcome will be: Table: GoGo Gas and Fanny's Fantastic Fuel Fanny's Fantastic Fuel High Price S100, S100 $25, $150 $150, $25 Low Price High Price Low Price GoGo Gas $50, $50 O a $100, $100. b. $150, $25. c. $25, $150. d. S50, $50You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: penguin pops, flopsicles, and cannies. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of penguin pops decreases by 8%, the quantity of flopsicles sold increases by 6% and the quantity of cannies sold decreases by 8%. Your job is to use the cross-price elasticity between penguin pops and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following table by computing the cross-price elasticity…
- Using a graph, explain why a firm might not want to spend A on advertising, even though it shifts the firm's demand curve to the right. In the figure to the right, let D¹ and MR¹ be demand and marginal revenue before advertising. Assume the monopoly has a constant marginal cost with no fixed cost such that MR¹ = AC¹. Then, suppose the monopoly advertises and that the advertising shifts demand and marginal revenue to D² and MR². Assume advertising is a marginal cost, such that the new marginal cost after advertising is still a constant and still equals a new average cost. Using the line drawing tool, graph the marginal cost curve, reflecting the cost of the advertising, such that the monopoly breaks even from advertising. Label this curve 'MC².! Carefully follow the instructions above, and only draw the required objects. p, $ per unit 30- 28- 26- 24- 22- 20- 18- 16- 14- 12- 10- 8+ 6- 4- 2+ 0- 0 2 V MC = A ▬▬▬▬▬ AMR MR² D 4 6 8 10 12 14 16 18 20 22 24 26 28 Q, Quantity D²Can you answer this for me please?Suppose Erin gives haircuts on Saturdays to make extra money. She is the only person in town cutting hair on Saturdays and therefore has some market power. Assume that she does not incur fixed costs, and the only significant variable cost to Erin is her time. As she gives more haircuts, Erin must increasingly forgo other valuable Saturday activities. For example, if she gives one haircut, she forgoes reading the paper after breakfast. If she gives two haircuts, she gives up reading the paper and sleeping an extra half-hour. Erin's clients are a varied group willing to pay between $16.00 and $28.00 for a haircut. Assume that Erin cannot price discriminate, i.e., charge different clients different prices. If Erin charges $28.00 per haircut, she will have one client per week; if she charges $24.00, she will have two; if she charges $20.00, three, and so forth. The following table contains data on the revenues and costs of Erin's haircut business as a function of her price-quantity choice.…