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Consider an industry in which two types of managers run firms, Genius and Ordinary. There is a fixed supply of 100 genius managers, whereas there is unlimited supply of ordinary managers. Both types of managers are willing to work for a salary of $144,000 per year. The long-run total cost of a firm that hires a genius manager at this salary is: TC(q)=144+1/2q^2 where q is output in thousands of units and total cost is expressed in thousands of dollars per year. The corresponding long-run marginal cost curve is: MC (q) =q where marginal cost is expressed as dollars per unit. The long-run total cost of a firm that hires an ordinary manager at the annual salary of $144,000 and the corresponding marginal cost are: TC(q)=144+q^2 and MC(q)=2q The market demand can be described byQ( p) = 7200 ?100 p , where p is the market price in dollars and Q is the market quantity, expressed in thousands of units per year. a) What is the minimum efficient scale for a firm run by an ordinary manager? By a genius manager? b) Suppose, at a long-run equilibrium, both types of managers are running the firms. What is the long-run equilibrium price? How many firms with ordinary managers would be operating at this equilibrium? Suppose that firms bid against each other for the services of genius managers. c) What would you expect the winning bid be (i.e., what is the maximum annual salary a firm would be willing to offer to a genius manager)? d) What would be the long-run equilibrium price in this case? How many firms with ordinary managers would be operating at this equilibrium? Explain
Smoking is banned from most public buildings in most states across the U.S. today. What type of market failure is the smoking ban intended to address. Illustrate what other options might be considered.
Illustrate what price also quantity would prevail after the imposition of the tax
Most economists believe that real economic variables and nominal economic variables behave independently of each other in the long run. For example, an increase in the money supply, a-------------- variable, will cause the price level, a-----------..
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Analyze a two-period model for the market of computers in which two firms operate. Firm 1 only produces in period 1 and is endowed with an old technology providing a quality level vO to consumers. Firm 2 is a potential entrant in period 2 and it is a..
Suppose Sammie Wall currently has a monopoly on widgets. The inverse demand function for the only customer interested in widgets is [P=40-6Q] and the cost to produced widgets can be described by the following cost function: [C=10+2Q^2] . If Sammie de..
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Find the property tax rate from the following information. Knoxville County needs $5,875,000 to balance the county budget. The total assessed value of all the property in the county is $60,000,000.
If the central bank increases bank reserves (or the monetary base) by $25,000, and the reserve requirement is 5%, then the total money supply increases by how much? Why? The best explanation will be mathematical and descriptive, with at least one app..
How would I compare also contrast McDonald's strategies in China with those of Wal-Mart in Mexico.
Shareholders are special because they provide capital. But, debt holders, including banks and bondholders, clearly also provide capital. Moreover, employees provide human capital, while suppliers and vendors provide raw inputs, often with generous cr..
Suppose you have hired a new worker, unfortunately you do not know if the worker is a shirker or a hard worker. Suppose working hard raises the probability of making a sale from 40% to 80% (thus raises the probability of making a commission C by the ..
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