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Suppose that fixed cost for a firm in the automobile industry is $5 billion (i.e., F = 5 billion) and that variable cost costs are equal to $17,000 per finished product (i.e., c = 17, 000). Assume that the price of each car is given by P = 17, 000 + 150/n, where n is the number of firms in a market. Suppose that the initial size of the U.S. and the European automobile markets are 300 million and 533 million people, respectively.
a. Calculate the equilibrium number of firms in the U.S. and European markets without trade.
b. What is the equilibrium price of automobiles in the U.S. and Europe if there is no trade between them.
c. Now suppose that there is a free trade between the U.S. and Europe. Calculate the equilibrium number of firms in the U.S. and European combined. What will be the new equilibrium price of automobiles?
d. Are consumers in each country better off? Why?
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In the aggregate expenditures model, if aggregate expenditures exceed real GDP, the economy will:
1.does easy access to distribution channels at best buy office depot as well as the direct- to- consumers on the
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The labor supply function is given by N=1000+12w and labor demand is N=2000-8w. Find the equilibrium level of employment and wage. Given existing technology and the capital stock, output is given by the function Y=100N. Does the function exhibit dimi..
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The country Panjim has been growing at the rate of 8 percent annually following a series of economic growth reforms. Adelphia, a neighboring country, is also growing rapidly, How has the change in capital-labor ration affected efficiency? What propo..
Comparing the situation of a nominal rate of 10 percent and an inflation rate of 9 percent with a nominal interest rate of 6 percent and inflation rate of 2 percent, consumers would borrow more in which situation?
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Snow peak Ski Resort offers a price for a lift ticket that is barely over its marginal cost, but the high equipment rental fee keeps generating big profits. Which pricing strategy is the management using?
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