tices are described in the following scenarios: A. Bundling B. Tying sales C. Exclusive dealings 1. To purchase the sports channels, customers also have to purchase several movie channels 2. A electronic store negociates to be the only distributor of a new video console game ? 3. You can buy a XYZ laptop for 500 dollars and a XYZ printer for 250 dollars, but with a special promotio. you can buy both for 650 dollars

tices are described in the following scenarios: A. Bundling B. Tying sales C. Exclusive dealings 1. To purchase the sports channels, customers also have to purchase several movie channels 2. A electronic store negociates to be the only distributor of a new video console game ? 3. You can buy a XYZ laptop for 500 dollars and a XYZ printer for 250 dollars, but with a special promotio. you can buy both for 650 dollars

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Breakdown of a cartel agreement Consider a town in which only two residents, Sean and Yvette, own wells that produce water safe for drinking. Sean and Yvette 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 Quantity Demanded Total Revenue (Dollars per gallon) (Gallons of water) (Dollars) 5.40 0 0 4.95 40 $198.00 4.50 80 $360.00 4.05 120 $486.00 3.60 160 $576.00 3.15 200 $630.00 2.70 240 $648.00 2.25 280 $630.00 1.80 320 $576.00 1.35 360 $486.00 0.90 400 $360.00 0.45 440 $198.00 0 480 0 Suppose Sean and Yvette 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, Sean and Yvette agree to split production equally. Therefore, Sean's profit is $ __________ , and Yvette's profit is __________ .…
Monopolistic competition creates inefficiency because of the markups and excess capacity. The graph below depicts the situation for a hypothetical monopolistically competitive firm. The curves included in the graph are demand (D), marginal revenue (MR), average total cost (ATC), and marginal cost (MC). The graph is not graded, but you can move the point labeled P to help you find the numeric values to answer the questions. Price $ 80 MC M 45 P D ATC Quantity What is the size of the markup on the price? Number $0 What is the size of the excess capacity? Number Units
The figure below shows the demand curve (DD), the marginal revenue curve (MR), and the cost curves of a monopolistic competitor. Price A 3 MR QE B) Loss incurred by the producer C) Consumer surplus D) Deadweight loss ATC 25) A monopolistically competitive firm A) earns low but positive economic profits B) earns high economic profits C) earns zero economic profits D) incurs losses DD Quantity 24) Refer to the figure above. What does the region ABDC indicate? A) Economic profit MC in the long run.
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…
Exercise A.3. Does a monopolistic competitor produce too much or too little compared to the most efficient level? What practical considerations make it difficult for public authorities to solve this problem?
2. The market for dark chocolate us characterized by Cournot duopolists - Honeydukes and Wonka industries. The market demand for dark chocolate is:P = 8 - 0.005Qdwhere P is the price per bar in dollars and Qd is dark chocolate's daily quantity demanded in bars (use qh to represent the quantity of dark chocolate sold by Honeydukes and qw to represent the quantity of dark chocolate sold by Wonka Industries). Honeydukes has a constant marginal cost of $2.50 per bar, while Wonka Industries has a constant marginal cost of $3.00 per bar. The firms move simultaneously in choosing their profit-maximizing quantity of output.a. Given the firms move simultaneously, what is the equation for Honeydukes' reaction function with qh expressed as a function of qw?b. Given the firms move simultaneously, what is the equation for Wonka's reaction function with qw expressed as a function of qh?c. What quantity of dark chocolate will each firm produce in equilibrium and what price will be established for a…
There is only one provider of electricity in San Diego County - SDGE. They have a lot of power to set prices. They set prices so that margin cost = marginal revenue, Choose.. Choose.. There is one market price for crude oil. In this type of commodity market, every supplier is a price taker Oligopolistic Competition Monopolistic Competition Price Discrimination We often see price wars in the airline industry. In this industry, there are a few big players and they pay attention to their competitors' pricing decisions and are likely to respond accordingly. Monopoly Pure or Perfect Competition Price Fixing In many branded consumer goods markets, there are many sellers each selling over a broad range of prices. Thus, you can get a pair of Fila running shoes for $40 or a pair of Nikes for $80. This type of market is best categorized as Choose.
Question 20 In the market for a brand name medicine with a single company selling the medicine, that company is a_______Eventually, the government lets other companies sell the medicine as a "generic" alternative to the brand name. The effect of this increased competition is to_______ the medicine's price.O. monopoly, decreaseO. oligopoly, decreaseO. monopoly, increaseO. oligopoly, increase
Assume the figure on the right shows the cost structure for a monopolistically competitive firm selling a particular brand of shoes. MC is the marginal cost curve and AC is the average cost curve. If this firm produces 2 thousand pairs of shoes, does it minimize average cost? How much more would they need to produce to reach minimum average cost? The firm needs to produce an additional thousand pairs of shoes to reach minimum average cost. (Enter your response as an integer.) SEED Price (dollars per pair) 80- 72- 64- 56- 48- 40- 32- 24- 16- 8- 0- 0 1 Quantity (in thousands) MC AG 10 Q 20
Suppose the figure to the right represents the market for a particular brand of shampoo, such as L'Oreal, Lancome, or Maybelline. Assume the market is monopolistically competitive and is in long-run equilibrium. How much excess capacity does the firm have? The monopolistically competitive firm's excess capacity is thousand bottles of shampoo. (Enter your response as an integer.) C Price and cost (per bottle) 2.00- Q 1.80- MC Q ATC 1.60- 1.40- 1.20- 1.00- 0.80- 0.60- 0.40- 0.20- 0.00+ 0 2 MR D 4 6 8 10 12 14 16 18 20 Quantity (shampoo bottles in thousands)
If an industry is perfectly competitive or monopolistically competitive, then the government has relatively little reason for concern about a) the extent of competition. b) regulatory recapture. c) taking advantage of economies of scale. d) new ways of pleasing customers.
A market tends to be monopolistic if a. The good has too many substitutes b. The good has very few substitutes c. There are too many rivals d. The good has too few complements