QUESTION 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 fim sets the price independently, the Nash equilibrium outcome will be: Table: GoGo Gas and Fanny's Fantastic Fuel Fanny's Fantastic Fuel High Price High Price S100, $100 $25, $150 $150, $25 Low Price GoGo Gas Low Price $50, $50 Oa $100, $100. b. $150, $25. c. $25, $150. d. $50, $50

QUESTION 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 fim sets the price independently, the Nash equilibrium outcome will be: Table: GoGo Gas and Fanny's Fantastic Fuel Fanny's Fantastic Fuel High Price High Price S100, $100 $25, $150 $150, $25 Low Price GoGo Gas Low Price $50, $50 Oa $100, $100. b. $150, $25. c. $25, $150. d. $50, $50

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

USE TABLE #1: When illustrating the market for electric automobiles, the supply curve for electric automobiles is labeled _____ and the demand curve for electric automobiles is labeled _____. Group of answer choices D; S S; D S; Qd Qs; D
6. You estimate that a typical consumer's inverse demand function is P = 200- 20Q and your cost function is C = 80Q. Determine the optimal two-part pricing strategy. How much will 4 consumers pay?
1. Suppose you are the economic adviser of a company producing three brands of mobile pones; Nokia 10, Samsung X and iPhone Z. Suppose further that, your company eurrently sells 120 units of iPhone Z at ¢800 per unit, 150 units of Samsung X at ¢800 per unit and 200 units of Nokia 10 at ¢100 per unit, but in a bid to maximize profit, the company's managing director proposes an increase in price of Samsung X from e 800 to e1000 per unit for which quantity demanded is anticipated to fall from 150 to 100 units; iPhone Z from e800 to e1200 per unit for which quantity demanded is anticipated to fall from 120 to 100 units; and Nokia 10 from e100 to 200 per unit for which quantity demanded is expected to fall from 200 to 100 units. . Using the mid-point formula, compute the price elasticity of demand for each brand. From your answer in i, what is the type and economic interpretation of each brand's value of elasticity, i. 2. i. Briefly explain any three key features of a Perfect Competitive…
2. There are two brands of cigarettes X, Y. The demand for each is as follows: Qx = 80 – 2p Qy = 60 – 0.5p Assume that the marginal cost of producing cigarette X is $10, the marginal cost of producing cigarette Y is $8, and that the market for both cigarettes is perfectly competitive. Assume that each pack of cigarette X smoked does $5 worth of health damage to the smoker, and a total of $4 worth of health damage to the smoker's neighbors via second-hand smoke. Each pack of cigarette Y smoked does $6 worth of health damage to the smoker, and $5 health damage to the smoker's neighbors. (a) Plot the private demand curve and private supply curve for both cigarettes on separate axes. (b) What is the privately efficient quantity demand of both cigarettes? (c) Add the public supply curves to the graphs you plot in (a). (d) What is the socially efficient quantity demand of both cigarettes?
1. Suppose you are the economic adviser of a company producing three brands of mobile phones; Nokia 10, Samsung X and iPhone Z. Suppose further that, your company currently sells 120 Units of iPhone Z at ¢800 per unit, 150 units of Samsung X at ¢800 per unit and 200 units of Nokia 10 at ¢100 per unit, but in a bid to maximize profit, the company’s managing director proposes an increase in price of Samsung X from ¢800 to ¢1000 per unit for which quantity demanded is anticipated to fall from 150 to 100 units; iPhone Z from ¢800 to ¢1200 per unit for which quantity demanded is anticipated to fall from 120 to 100 units; and Nokia 10 from ¢100 to ¢200 per unit for which quantity demanded is expected to fall from 200 to 100 units. I. Using the mid-point formula, compute the price elasticity of demand for each brand. II. From your answer in i, what is the type and economic interpretation of each brand’s value of elasticity
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…
6. Individual and market supply Suppose that Andrew and Beth are the only suppliers of ice cream cones in a particular market. The following table shows their monthly supply schedules: On the following graph, plot Andrew's supply of ice cream cones using the green points (triangle symbol). Next, plot Beth's supply of ice cream cones using the purple points (diamond symbol). Finally, plot the market supply of ice cream cones using the orange points (square symbol). Note: Line segments will automatically connect the points. Remember to plot from left to right.
4. Describe the three pricing methods discussed in the textbook (cost-based, demand-based, competition-based).
3. Consider the Smith family who have the following demand for rental housing (q, measured in square feet): q=0.5*(y/p), where y is the Smith family income and p is the price of housing per square foot. The Smith's income is $4000 per month and initially the price of housing is $2 per square foot per month. a. If the Smiths are operating on their demand curve, how much housing are they consuming? b. How much is the Smith family's monthly rent? How much does the Smith family spend on other consumption? c. Starting from the initial equilibrium, the government now grants the Smiths a proportional rent subsidy with B=0.5. How much housing does the Smith family purchase given the subsidy? d. What is the gross market rent per month paid by the Smith family? What is the net rent (after deducting the subsidy) paid by the Smith family? How much does the Smith family spend on other consumption in its new equilibrium? e. What is total dollar outlay of the government for the Smith's housing…
Scenario Between recalls on mass-produced commercial dog food and a general understanding of the benefits of a healthier diet for pets, the demand for natural or organic dog food is experiencing a significant increase. Wanda's treats are more expensive than the mass-produced treats found in most grocery and big box stores, but she prides herself on providing high-quality products and believes that her customers are willing to pay the extra money for quality. 1. How does Wanda's strategy of being a high-quality provider take advantage of the shifts in consumer demand for healthy dog treats? 2. Identify and describe an event that might occur in the economy that would cause Wanda's strategy to no longer be successful for Salty Pawz. If this event occurred, What actions would Wanda have to take in response, and what impact might they have on her business?
1. There are two brands of cigarettes X, Y. The demand for each is as follows: Qx = 80 - 2p Qy = 60 - 0.5p Assume that the marginal cost of producing cigarette X is $10, the marginal cost of producing cigarette Y is $8, and that the market for both cigarettes is perfectly competitive. Assume that each pack of cigarette X smoked does $5 worth of health damage to the smoker, and a total of $4 worth of health damage to the smoker’s neighbors via second-hand smoke. Each pack of cigarette Y smoked does $6 worth of health damage to the smoker, and $5 health damage to the smoker’s neighbors. (a) Explain why the public supply curves differ from the private supply curves, and how this represents the externality from second-hand smoke. Highlight the area(s) of your diagram that represents a social loss. (b) Calculate the social loss for both. (c) Suppose the government decides to pursue a Pigouvian solution to eliminate social loss. What's amount of tax or subsidy would the government…
1. There are two brands of cigarettes X, Y. The demand for each is as follows: Qx = 80 - 2p Qy = 60 - 0.5p Assume that the marginal cost of producing cigarette X is $10, the marginal cost of producing cigarette Y is $8, and that the market for both cigarettes is perfectly competitive. Assume that each pack of cigarette X smoked does $5 worth of health damage to the smoker, and a total of $4 worth of health damage to the smoker’s neighbors via second-hand smoke. Each pack of cigarette Y smoked does $6 worth of health damage to the smoker, and $5 health damage to the smoker’s neighbors. (a) Plot the private demand curve and private supply curve for both cigarettes on separate axes. (b) What is the privately efficient quantity demand of both cigarettes? (c) Add the public supply curves to the graphs you plot in (a). (d) What is the socially efficient quantity demand of both cigarettes?