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Managerial Economics DQ
Strategic Behavior Oligopolies
An interesting example of strategic behavior comes from a 1997 article about Microsoft's investment in Apple (New Straits Times, 1997). The article is included in the Required Readings list. Facing tough anti-trust scrutiny from government agencies, Microsoft provided financial support to Apple in order to ensure Apple's survival and, therefore, to ensure that competitiveness in the industry remains. Moreover, the partnership with Apple provided an additional market for Microsoft's products - the MS Office and the IE products were to be bundled with the MAC OS as one of the conditions for this financing. Discuss this case in the context of market structure and strategic behavior. What market structure do these firms operate in? Why did Microsoft need to preserve competitiveness in the industry? What was Microsoft afraid of in the event that Apple did not survive?
Local Market Power
Bulls Eye department store specializes in the sales of discounted clothing, shoes, household items, etc. similar to the offerings at a regular Walmart or Target. Bulls Eye is the only department store in Show Low and the nearest other discount retailer is Target, located 49 miles away in Eagar. Bulls Eye, therefore, has some market power in its local area. Despite having some market power, Bulls Eye is currently suffering losses. An analyst at Bulls Eye is recommending to the manager to raise prices, so that profitability can be improved. The manager is unsure of this strategy as recent data points to increasing numbers of individuals shopping more and more. What are the pros and cons of raising the prices at Bulls Eye and would that strategy be profitable?
What is the difference between the output level where the total profit is maximized and the output level where the total revenue (TR) is maximized?
Calculate the arc elasticity of demand. Is the demand elastic or inelastic over this region? What happened to total revenue?
1.Would it be possible for firms to calculate their maximum profit output if they did not use marginal cost and marginal revenue concepts?
Assume that just some of the members of a common market like the EU adopt full economic and monetary union, including a common currency. What are the advantages and disadvantages to those members joining the full EMU and to those not?
Interview with the planning manager - Conduct interview with one of the managers in our company and ask him the questions
What lessons could you take from the business concepts of fixed and variable costs? And do you factor in the value of your time when you price comparison shop? Why or why not?
Explain the basic distinction between microeconomic analysis and macroeconomic analysis. Describe the types of issues that each branch of analysis focuses on - Describe the types of issues that each branch of analysis focuses on.
Suppose that Dexter and Amy live in a community that is trying to determine how much of the public good should be produced.The marginal cost of producing the public good is constant at $2. What is the community's willingness to pay for the 24th unit ..
1.If an industry regulator adopts an RPI X formula for price regulation, is it desirable that the value of X should be adjusted as soon as cost conditions change?
Calculate the value added by orange growers, orange juice processors, supermarkets, and restaurants.
Which of the methods in parts (a) and (b) produces better forecasts for the three years from 2007 to 2009? Answer on the basis of mean square error (MSE).
Campare RMSEs for moving average and exponential forecasts to answer "Is this a better forecast than the moving average?" Use 166.63, the mean of all 36 months, as the initial forecastfor Jan. 1998 for both exponential smoothing forecasts.
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