When there are low barriers to entry in a now profitable market, there may be a flood of alternative suppliers. This will cause a shift in the demand curve and price. Group of answer choices left, higher left, lower right, lower right, higher the

When there are low barriers to entry in a now profitable market, there may be a flood of alternative suppliers. This will cause a shift in the demand curve and price. Group of answer choices left, higher left, lower right, lower right, higher the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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True or false (A). A profit‐maximizing monopolist will produce output where marginal cost is equal to price (B). Suppose we know that a monopolist is maximizing profits. The monopolist has maximized the difference between marginal revenue and marginal cost. (C) In perfect competition, MUX = PX is the condition that ensures that firms produce the right things.
Which of the following conditions is most likely essential for implementing a successful market- skimming pricing strategy for a product? Lower-priced alternatives can enter the rearket easily. The product's price matches its manufacturing costs. Low prices promote more market growth than high prices. A low-price position of the product is maintained. The product's quality and image must support its high price.
Consider a Bertrand (price choice) model where firms have identical costs. The equilibrium price is the same whether there are two or three firms in the market. (a) True. (b) False.
A store estimates is customer inverse demand is P= 6.1 - 2.6Q, and the marginal cost of each rental is $0.48. If they use block pricing, what should the price be for the entire package?
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(A) Suppose that the two firms merge. Write down the profit function of the merged firm. Calculate the profit maximizing level of output, the amount of pollution for the merged firm, and its profit. Is the merger Pareto improvement? Why or why not? (B) Suppose that the merger is forbidden by the government. Instead, now the fishery has the property right to water. In other words, anybody who wants to pollute the water needs to buy a pollution right from the fishery. Let the price of the pollution right be Px. Write down the steel mill’s new profit function and the fishery’s new profit function. (C) Calculate the profit maximizing level of output for each firm, the amount of pollution, and the price of pollution right. please, please answer the three questions together..
As a basic rule of thumb, business owners should differentiate their products as much as possible when: a) price competition is intense. b) price competition is subdued. c) costs are low. d) costs are high.
The MC for the Hydration Power Drink is $1.00. The MC for the smoothie is $4.00.Using the chart and the information provided, what is the contribution margin at each price for each product? Hydration High Price contribution margin is Hydration Low Price contribution margin is Smoothie High Price contribution margin is Smoothie Low Price contribution margin is
Market equilibrium takes place at the point where MC < MR True/ False
Digital piracy. Suppose the British rock band Radiohead is about to release its new album In Rainbows. For now, assume the band cannot choose the price of the album, which is set at $10. The (marginal) cost to distribute each copy is $2. (a) If demand for the album is given by p = 100 - q, how many albums will be sold? What will profits be? (b) Draw the demand curve and indicate the price and quantity of albums sold using your answer to (a). Calculate deadweight loss and show this on your diagram too. (c) Suppose that the introduction of the Internet lowers distribution costs to $0 but also allows consumers to pirate the album for free. Assume that consumers who were not willing to pay $10 will pirate the album. If 50% of consumers that were prepared to pay $10 (or more) for the album also pirate for free, what will Radiohead's profits be? What is deadweight loss?
Bargaining power of customers is likely to be the lowest for markets involving Apparel Automobiles Patented drugs Insurance