Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
expand_more
expand_more
format_list_bulleted
Question
Chapter 15, Problem 15.9P
a
To determine
To find:
Market output, price, consumer surplus, industry profit, total welfare.
b)
To determine
To find:
Nash equilibrium, Market output, price, consumer surplus, industry profit, total welfare, Herfindahl index.
c)
To determine
To find:
Market output, price, consumer surplus, industry profit, total welfare, Herfindahl index.
d)
To determine
To find:
Market output, price, consumer surplus, industry profit, total welfare, Herfindahl index.
e)
To determine
To find:
Relationship between price, profit and total welfare.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The Hull Petroleum Company and Inverted V are retail gasoline franchises that compete in a local market to sell gasoline to consumers. Hull and Inverted V are located across the street from each other and can observe the prices posted on each other’s marquees. Demand for gasoline in this market is Q = 110 −5P, and both franchises obtain gasoline from their supplier at $3.50 per gallon. On the day that both franchises opened for business, each owner was observed changing the price of gasoline advertised on its marquee more than 10 times; the owner of Hull lowered its price to slightly undercut Inverted V’s price, and the owner of Inverted V lowered its advertised price to beat Hull’s price. Since then, prices appear to have stabilized. Under current conditions, how many gallons of gasoline are sold in the market, and at what price?Instructions: Enter your responses rounded to the nearest two decimal places.Gallons sold:
Price: $ How would prices differ if Hull had service attendants…
The Hull Petroleum Company and Inverted V are retail gasoline franchises that compete in a local market to sell gasoline to
consumers. Hull and Inverted V are located across the street from each other and can observe the prices posted on each other's
marquees. Demand for gasoline in this market is Q= 100 -4P, and both franchises obtain gasoline from their supplier at $2.75 per
gallon. On the day that both franchises opened for business, each owner was observed changing the price of gasoline advertised on
its marquee more than 10 times; the owner of Hull lowered its price to slightly undercut Inverted V's price, and the owner of Inverted V
lowered its advertised price to beat Hull's price. Since then, prices appear to have stabilized. Under current conditions, how many
gallons of gasoline are sold in the market, and at what price?
Instructions: Enter your responses rounded to the nearest two decimal places.
Gallons sold:|
Price: $
How would prices differ if Hull had service attendants…
k
:
ces
As the manager of Smith Construction, you need to make a decision on the number of homes to build in a new residential area where
you are the only builder. Unfortunately, you must build the homes before you learn how strong demand is for homes in this large
neighborhood. There is a 50 percent chance of low demand and a 50 percent chance of high demand. The corresponding (inverse)
demand functions for these two scenarios are P= 300,000-400Q and P= 500,000 -225Q, respectively. Your cost function is CQ) =
165,000+ 243,750Q.
How many new homes should you build, and what profits can you expect?
Number of homes you should build:
homes
Profits you can expect: $1
Knowledge Booster
Similar questions
- There is a Jexaco gas station right across the street from a Jalero station in Pennsylvania It is safe to assume that they compete locally for the same consumers and can observe the prices posted on each other's marquees. Demand for gasoline in this local market is Q = 80 − 6P, and both stations obtain gasoline from their supplier at $2.20 per gallon. On the day that both franchises opened for business, each owner was observed changing the price of gas advertised on its marquee more than 10 times; the owner of Jexaco lowered its price to slightly undercut Jalero's price, and the owner of Jalero lowered its price to beat Jexaco's. Since then, prices appear to have stabilized. Which of the oligopoly models is most suitable for explaining this behavior by these firms? Under current conditions, how many gallons of gasoline are sold in the market, and at what price? Would your answer differ if Jalero had service attendants available to fill consumers' tanks but Jexaco was only a…arrow_forwardThe Hull Petroleum Company and Inverted V are retail gasoline franchises that compete in a local market to sell gasoline to consumers. Hull and Inverted V are located across the street from each other and can observe the prices posted on each other’s marquees. Demand for gasoline in this market is Q = 80 − 6P, and both franchises obtain gasoline from their supplier at $2.20 per gallon. On the day that both franchises opened for business, each owner was observed changing the price of gasoline advertised on its marquee more than 10 times; the owner of Hull lowered its price to slightly undercut Inverted V’s price, and the owner of Inverted V lowered its advertised price to beat Hull’s price. Since then, prices appear to have stabilized. Under current conditions, how many gallons of gasoline are sold in the market, and at what price? Would your answer differ if Hull had service attendants available to fill consumers’ tanks but Inverted V was only a self-service station? Explainarrow_forwardThe Hull Petroleum Company and Inverted V are retail gasoline franchises that compete in a local market to sell gasoline to consumers. Hull and Inverted V are located across the street from each other and can observe the prices posted on each other’s marquees. Demand for gasoline in this market is Q = 80 -9P, and both franchises obtain gasoline from their supplier at $2.75 per gallon. On the day that both franchises opened for business, each owner was observed changing the price of gasoline advertised on its marquee more than 10 times; the owner of Hull lowered its price to slightly undercut Inverted V’s price, and the owner of Inverted V lowered its advertised price to beat Hull’s price. Since then, prices appear to have stabilized. Under current conditions, how many gallons of gasoline are sold in the market, and at what price? Gallons sold: ? Price: $ ? How would prices differ if Hull had service attendants available to fill consumers’ tanks but Inverted V was only a self-service…arrow_forward
- The Camera Shop sells two popular models of digital SLR cameras (Camera A Price: $230, Camera B Price: $310). The sales of these products are not independent of each other, but rather if the price of one increase, the sales of the other will increase. In economics, these two camera models are called substitutable products. The store wishes to establish a pricing policy to maximize revenue from these products. A study of price and sales data shows the following relationships between the quantity sold (N) and prices (P) of each model: NA = 192 - 0.5PA + 0.25PB NB = 305 + 0.08PA - 0.6PB Construct a model for the total revenue and implement it on a spreadsheet. Develop a two-way data table to estimate the optimal prices for each product in order to maximize the total revenue. Vary each price from $250 to $500 in increments of $10. Max revenue occurs at Camera A price of $ _____________ Max revenue occurs at Camera B price of $ ____________arrow_forwardAliyah is preparing to expand her IT consulting company. The current market rate for IT professionals is $58,000 per year. Each employee she hires will also require a computer and equipment that costs $6,000 per employee annually. Hiring more employees means that Aliyah can provide consulting services to more clients each year. Each client Aliyah has will pay her $15,000 per year. The number of clients Aliyah can take on depends on the number of workers she hires as shown in the accompanying table. What is the marginal cost and marginal benefit of hiring each worker? Using the Rational Rule to maximize her economic surplus, how many workers should Aliyah hire? Number of workers Clients per year 0 0 1 11 2 20 3 27 4 32arrow_forwardSuppose a group of chess players gather and decide to rank themselves in "popularity". The popularity score of a player in the gathering is the number of other players in the gathering that player has previously played a game against. Prove that there will be ties in this score among the players in the gathering.arrow_forward
- The smartphone market has been dominated by Apple, but recently the Droid has been able to leverage Google's information services into market gains, while Blackberry, known for its secure business-oriented network, has attempted to become more attractive with a “friendlier” interface. At the same time, a number of less capable fringe firms are emerging. Suppose an economist analyzes this industry as follows: ECONOMIST: The market had been a near Apple monopoly. Profits of this monopoly attracted entry by Droid- and Blackberry-based phones, increasing rivalry between firms in the industry. The emergence of smaller fringe firms suggests that entry barriers have fallen substantially, so competition has or will soon become fiercer. True or False: This analysis is consistent with the industrial organization (IO) view.arrow_forwardThe smartphone market has been dominated by Apple, but recently the Droid has been able to leverage Google's information services into market gains, while Blackberry, known for its secure business-oriented network, has attempted to become more attractive with a "friendlier" interface. At the same time, a number of less capable fringe firms are emerging. Suppose an economist analyzes this industry as follows: ECONOMIST: The market had been a near Apple monopoly. Profits of this monopoly attracted entry by Droid- and Blackberry- based phones, increasing rivalry between firms in the industry. The emergence of smaller fringe firms suggests that entry barriers have fallen substantially, so competition has or will soon become fiercer. True or False: This analysis is consistent with the industrial organization (IO) view. True Falsearrow_forwardPretend that you are working for Del Monte in the area of canned vegetables and that Del Monte has a system that uses data analytics. One of your major competitors is Green Giant vegetables. You are particularly interested in analyzing canned green beans. A portion of Del Monte’s data analytic system contains the following variables: Sales of various can sizes; prices of various sized cans; types of stores where green beans are sold; shelf locations of green beans in various types of stores; various promotions pertaining to green beans. Also assume that this analytic system also has this information for Green Giant beans. Explain for what types of decisions could this system be used concerning Del Monte’s Green Beans. Also address the possibility of competitive analyses pertaining to Green Giant Beans.arrow_forward
- Business group Business Unity South Africa (BUSA) has written to Transport minister Fikile Mbalula requesting he makes changes to South Africa’s regulations around the transportation of logistics containers. According to BUSA, Regulation 224 (b) of the National Road Traffic Act currently prohibits the transportation of high cube containers on South African roads. “High cube containers constitute the overwhelming majority of containers currently manufactured and transported internationally – including in neighbouring states,” it said. “However, the combined height of a vehicle transporting a high cube container is currently 4.6 metres – 300mm above the legal limit.” Despite several years of industry engaging the Department of Transport on the matter, as well as moratoriums being issued, no progress has yet been forthcoming on fundamentally resolving the issue, the group said. “This regulatory anomaly puts South Africa’s trade and logistics regime out of step with international and…arrow_forwardBusiness group Business Unity South Africa (BUSA) has written to Transport minister Fikile Mbalula requesting he makes changes to South Africa’s regulations around the transportation of logistics containers. According to BUSA, Regulation 224 (b) of the National Road Traffic Act currently prohibits the transportation of high cube containers on South African roads. “High cube containers constitute the overwhelming majority of containers currently manufactured and transported internationally – including in neighbouring states,” it said. “However, the combined height of a vehicle transporting a high cube container is currently 4.6 metres – 300mm above the legal limit.” Despite several years of industry engaging the Department of Transport on the matter, as well as moratoriums being issued, no progress has yet been forthcoming on fundamentally resolving the issue, the group said. “This regulatory anomaly puts South Africa’s trade and logistics regime out of step with international and…arrow_forwardThe Hull Petroleum Company and Inverted V are retail gasoline franchises that compete in a local market to sell gasoline to consumers. Hull and Inverted V are located across the street from each other and can observe the prices posted on each other's marquees. Demand for gasoline in this market is Q= 120 – 5P, and both franchises obtain gasoline from their supplier at $3.00 per gallon. On the day that both franchises opened for business, each owner was observed changing the price of gasoline advertised on its marquee more than 10 times; the owner of Hull lowered its price to slightly undercut Inverted V's price, and the owner of Inverted V lowered its advertised price to beat Hull's price. Since then, prices appear to have stabilized. Under current conditions, how many gallons of gasoline are sold in the market, and at what price? Instructions: Enter your response rounded to the nearest two decimal places. Gallons sold: Price: $ How would prices differ if Hull had service attendants…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
