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Your consulting firm was just granted an exclusive contract for your state. You now must decide your pricing policy, given the following relationships: P = $1400 – 0.0004Q MR = $1400 – 0.0008Q AVC = $1000 where P is the price, Q the quantity, and AVC the average variable cost. The firm will encounter no fixed costs, and all revenue is after taxes. As your firm has been granted an exclusive contract, your pricing and output decisions will be those of a monopolist. Tasks: 1.Using the data above, calculate the output the firm will provide. 2. Determine the price at this output level. 3.Complete the Microsoft Excel Template given below using the data in the problem. 4.Check whether your data is consistent with your calculations in question 1. Why or why not? 5. Now assume that the state decides to give as many contracts as it can for the same activity, so your firm is now operating in a perfectly competitive market. How will your price and output decisions change? Explain the differences and why these changes happened.
Consider two countries, Peru and Brazil, who produce coffee and bananas. Brazil and Peru's hourly productivity are as follows: What is Peru’s opportunity cost of producing a banana? What is Brazil’s. Who has the absolute advantage in coffee productio..
What is the primary advantage of revealed-preference valuation methods (e.g. hedonic pricing and travel cost methods)? What is their primary disadvantage? Explain both answers briefly.
A local car wash charges $3.00 per wash or the option of $12.95 for 5 weeks payable in advance with the first wash. if you normally wash your car once a month, would the option be worthwhile if a minimum attractive rate of return 29% compounded annua..
Compute by how much monetary policymakers must change the nominal money supply for the expectations of firms and workers to be realized.
Which of the following conditions may make predatory pricing by incumbents rational?
The government finances deficits by borrowing. By reducing the pool of saving, government borrowing can reduce the availability of loanable funds and push interest rates upward--the crowding out effect. Which of the following choices explains how the..
Elucidate what does this imply about the use of monetary and fiscal policy over the business cycle.
Your weapons company, Top GunZ, sells fighter jets to two countries. The jets can be produced at a constant marginal cost of $10 million. The demand for jets in the two countries can be represented as: QA = 100 – 2p QB = 80 – 4p. Assume that the opti..
Differentiate the equilibria of model. Also the classification should be a function of the bliss point of the candidates.
Consider two firms: a yoga studio and a bar. The bar produces noise which reduces the price that the yoga studio can charge from its customers.Assume that the bar can sell an unlimited amount of drinks at the market price p and its marginal cost incr..
What is the relationship between a country’s political/economic environment and risk? What about corruption? Please provide examples to support your post!
Why do restaurants shut down at a certain hour of the day, say 10:00 p.m? Why do movie theatres still show movies that have just a handful of movie watchers? What is the difference between accounting profit, economic profit, and normal profit?
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