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Pear Inc. is a monopolist producing the iWatch, a wristwatch mobile communication device. The iWatch is a device that will last for exactly two periods, after everyone will switch to Boogle Glass, a eyeglass mobile communication device that is not yet available. Demand for the use of the iWatch is R = 144 - 3Q in both periods. Pear can produce the iWatch at a marginal cost of zero. 1. Suppose that Pear is able to commit to a production plan for the iWatch in both periods. Write down Pear's maximization problem under commitment. 2. If Pear is able to commit, what is its optimal production plan? 3. What is the price of an iWatch in each period? 4. Now suppose that Pear chooses how much to produce in each period, with no commitment. Given that it produces Q1 in period 1, how much should Pear produce in Period 2? 5. Without commitment, what should consumers expect the period 2 price to be once they observe Q1? 6. Given this, what is the price of an iWatch in Period 1 as a function of Q1? 7. What is the optimal quantity Pear produces in Period 1? 8. Does Pear make more profit with or without commitment? Explain your answer by either calculating profit or using your knowledge of durable goods models from class.
1 given the following reliabilities of components bridge will not collapse in a series with reliabilities indicated.
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Desired consumption is Cd = 100 + 0.8Y - 500r - 0.5G, and desired investment is Id = 10 -500r. Real money demand is Md/P = Y - 2000i. Other variables are πe = 0.05, G = 200, = 1000, and M = 2100.
according to the federal reserves federal open market committee 2011 thenbspfederal reserve controls the three tools
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write a 300-word paper in which you analyze the individual values and the organizations values as reflected by the
Greetings Corporation stores, as well as the Wall Décor division, have enjoyed healthy profitability during the past 2-years. Although profit margin on prints is often thin, volume of print sales has been substantial enough to generate 15 percent of ..
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Which input bundle represents efficient production of 100 units of output if the rental paid to capital is $25 and the wage paid to labor is $50? Round any decimals to the nearest hundredth. Derive the firm's cost function using the rental and wa..
Production function exhibit constant, increasing, or decreasing returns to scale?
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