EBK MICROECONOMICS: PRIVATE AND PUBLIC
16th Edition
ISBN: 8220103612142
Author: Gwartney
Publisher: Cengage Learning US
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Question
Chapter 11, Problem 1CQ
To determine
Effect of barriers to entry to attain the long run profit.
Expert Solution & Answer
Explanation of Solution
Barriers to entry are crucial for the existence of long run profit. It is because a firm can make profit in the short run. However, if there are no barriers to entry, other firms will enter into the market to capture the profit and they increase the supply of products. The
Economics Concept Introduction
Barriers to entry: Creating the obstacles like high startup cost and other barriers to prevent the entrance of new firm in the market.
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Tasks
Exercise 1
Assess the following functions:
1. f(x)= x2+6x+2
2.f '(x)=10x-2x2+5
a. Find the stationary points. (5 marks)
b. Determine whether the stationary point is a maximum or minimum. (5 marks)
c. Draw the corresponding curves (5 marks)
Problem 2:
The sales data over the last 10 years for the Acme Hardware Store are as follows:
2003
$230,000
2008
$526,000
2004
276,000
2009
605,000
2005
328,000
2010
690,000
2006
388,000
2011
779,000
2007
453,000
2012
873,000
1. Calculate the compound growth rate for the period of 2003 to 2012.
2. Based on your answer to part a, forecast sales for both 2013 and 2014.
3. Now calculate the compound growth rate for the period of 2007 to 2012.
1. Based on your answer to part e, forecast sales for both 2013 and 2014.
5. What is the major reason for the differences in your answers to parts b and d? If you were to
make your own projections, what would you forecast? (Drawing a graph is very helpful.)
Chapter 11 Solutions
EBK MICROECONOMICS: PRIVATE AND PUBLIC
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