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(1) Assume the market for beer is characterized by the following structure. Firm MC Sales 1 15 100 2 12.5 90 3 13 40 4 13 10 5 13 8 6 13 7 7 12.5 5 The marginal cost is assumed to be constant for each firm. A competitive firm would have incurred a MC equal to 12. The market price is equal to $20. (a) Calculate CR4 and HHI (b) Calculate (c) Calculate the Lerner Index for each firm and the weighed market Lerner Index (d) Calculate the welfare loss per sale and the overall welfare loss due to the high degree of industry concentration (2) According to Sutton, the number of firms on a market is determined by the market size, the price-cost margin and the fixed set-up cost (such as advertising cost), which is sunk. Assume the following features: Market size S (= sales): $3,500 price P = 20 average cost AC = 14 the sunk fixed set-up cost F is a function of S and is given by F = 1.03333*S - 3000 (a) Calculate the number of firms on this market (b) Now assume that the market doubles in size. Will the number of firms increase or decline? Calculate and round to the next integer.
Profit maximization is theoretically the most sound but practically unattainable objective of business firms. In the light of this statement critically appraise the Baumol’s sales revenue maximization theory as an alternative objective of the firm.
This price reduction would also increase sales to 220,000 units during the relevant years. a) Make the decision tree. b) What is the optimal strategy for the monopolist?
use the accompanying table to answer the following questions.quantityprivate socialcost cost benefit1 2 4 122 6 10
1. describe the industry and explain the general pattern of change of the particular market model.2. hypothesize the
Assume Zack values his time at $0.25 per minute. He can purchase an MBTA report each morning that tells what the actual travel time will be for both the bus and the subway. How much is he willing to pay for this information?
If you decide to use $34,000 as your working estimate of marginal costs, what increase in Custom's purchases would be necessary for the proposal not to reduce GM's profits on this account?
Sometimes it is convenient to think about the consumer's problem in its "dual" form. This alternative approach asks how a person could achieve a given target level of utility at minimal cost. this approach will yield the same choices for this consu..
jim sees commuting by bus and t as perfect substitutes u t b that is he would exchange one commute by bus for one
it is an important tradition in the santos family that that they eat the same meal at their favorite restaurant every
1. use the information in the table below to answer the following questions.nbspqavcatcmcmr1p1mr2p20
The opening statement on the website of the Organization of Petroleum Exporting Countries (OPEC) says, “…OPEC’s eleven numbers are all developing countries whose economies are heavily reliant on oil export revenues.They therefore seek stable oil pric..
explain the viewpoints of classical and keynesian economists. how did the economy that existed at the time of these
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