QUESTION 8Consider a market with an incumbent firm and a new entrant E producing a homogenous product and competing in quantities. The incumbenthas a technology with cost function C(q)-30q while the entrant produces with CE(q)=20q.The inverse demand is given by P(q)=180-q.Suppose the entrant is credit-constrained and has to repay an amount of D-400 at the end of the period. If the entrant is not able to cover thisamount with its profits, the firm has to leave the marketplace.What is the minimum quantity qi that makes sure the entrant is unable to repay the amount of D=400? [Please use the next smallest integer.That is instead of 50+epsilon, use 50.]8

To determine the minimum quantity q that makes sure the entrant is unable to repay the amount of D =…

Answered: QUESTION 8 Consider a market with an…

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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Q9
You are the assistant to Simone Nain who is the CEO and board member of Simplicity, a small private company making a single product and mainly owned by the Nain family that has no diversified assets. Some family members have been approached by representatives of Complex Solutions plc. , a large publicly listed corporation, owned by diversified investors, that carries no debt. Complex Solutions are interested in buying the Simplicity business. Nain is however puzzled because the price Complex Solutions plc is offering suggests that they are using a much lower discount rate than the family firms own current estimate of the appropriate discount rate for Simplicity. Nain is concerned that this might mean that the discount rate used by the company at present is too high. You have been asked to write a note (approximately 500 words) to explain whether Simplicity, if it refuses the offer from Complex Solutions plc, should make future decisions, as a private family company, based on a…
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