Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Textbook Question
Chapter 17, Problem 6IAPA
Use the following information to work Problems 5 and 6.
Sony announces Smart Tennis Sensor
Tennis racket maker Babolat introduced its smart racket Play Pure Drive in 2013. Smash and Shot Stats soon followed. Now Sony is partnering with Wilson to make Smart Tennis Sensor, a device that sits at the bottom of a racket’s handle and tracks every metric and statistic that a tennis player or coach could need.
Explain why the economic profit that Babolat and Sony make in this market is likely to be temporary. Draw a graph to illustrate the outcome in the long run. Show the excess capacity and markup in the long run.
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Sony announces Smart Tennis Sensor
Tennis racket maker Babolat introduced its smart racket
Play Pure Drive in 2013. Smash and Shot Stats soon
followed. Now Sony is partnering with Wilson to make
Smart Tennis Sensor, a device that sits at the bottom of a
racket's handle and tracks every metric and statistic that a
tennis player or coach could need.
Source: Gizmag August 22, 2014
Explain why the economic profit that Babolat and Sony
make in this market is likely to be temporary.
Draw a graph to illustrate the outcome in the long run.
Show the excess capacity and markup in the long run.
Babolat's and Sony's economic profit from smart rackets is
likely to be temporary because
OA. other firms will enter the market and demand for
rackets made by Babolat and Sony will decrease
OB. the number of tennis players is likely to decrease
OC. other firms will enter the market and the supply of
smart rackets made by Babolat and Sony will
decrease
Selected:
none
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220
200-
180-
160-
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Dana is a dot-com entrepreneur who has established a
Web site at which people can design and buy awatch.
Dana pays $200 a month for a Web server and Internet
connection. The watches that customers design are made
to order by another firm, and Dana pays this firm $60 a
watch. Dana has no other costs.
The table shows the demand schedule for Dana's
watches.
What is Dana's profit-maximizing output, price, and
economic profit?
Dana's profit-maximizing output is
Dana's profit-maximizing price is $
Dana's economic profit is $ a month.
watches a month.
a watch.
Price
(dollars per watch)
100
80
60
40
20
0
Quantity
(watches per month)
0
20
40
60
80
100
Price, cost, revenue
$100
$90
$80
$70
$60
$50
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MR
MC
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/AC
0
7000
14000
21000
12000
Dresses per year
Refer to the graph shown of a monopolistically competitive firm. In the long run:
marginal cost will fall for firms that remain as other firms exit the industry.
demand will fall for firms that remain as other firms enter the industry.
Odemand will rise for firms that remain as other firms exit the industry.
O average total cost will rise for firms that remain as other firms enter the industry.
Chapter 17 Solutions
Foundations of Economics (8th Edition)
Ch. 17 - Prob. 1SPPACh. 17 - Prob. 2SPPACh. 17 - Prob. 3SPPACh. 17 - Prob. 4SPPACh. 17 - Prob. 5SPPACh. 17 - Prob. 6SPPACh. 17 - Prob. 7SPPACh. 17 - Prob. 8SPPACh. 17 - Prob. 9SPPACh. 17 - Prob. 10SPPA
Ch. 17 - Washtenaw Dairy in Ann Arbor, Michigan, sells 63...Ch. 17 - Prob. 2IAPACh. 17 - Prob. 3IAPACh. 17 - Prob. 4IAPACh. 17 - Prob. 5IAPACh. 17 - Use the following information to work Problems 5...Ch. 17 - Prob. 7IAPACh. 17 - Prob. 8IAPACh. 17 - Prob. 9IAPACh. 17 - Prob. 1MCQCh. 17 - Prob. 2MCQCh. 17 - Prob. 3MCQCh. 17 - Prob. 4MCQCh. 17 - Prob. 5MCQCh. 17 - Prob. 6MCQCh. 17 - Prob. 7MCQ
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- Please do fast and add explanation , diagramarrow_forwardConsider the diagram below depicting the revenue and cost conditions faced by a monopolistically competitive firm, and then answer the following questions. $40 $35 $30 MC ATC $25 $20 $17 A $15 $10 4.40 $5 3.25 MR Demand 3 4 5 7 8 9 10 Quantity Instructions: Round your answers to 2 decimal places. a. What is total revenue for this firm? $56.88 b. What is total cost for this firm? $ $58.88 c. What is this firm's economic profit? d. This firm is most likely In long-run ]equilibrlum because Instructions: In order to recelve full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For Incorrect answer(s). click the option twice to empty the box. ? P= ATC. ? P> MC. ? MR = MC. 2 the firm is experlencing normal profits. 2 the firm is experlencing economic profits. 7 demand exceeds marginal revenue. Price and costsarrow_forwardCh 19 Economicsarrow_forward
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