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Suppose that market demand is given by P = 260 - 2Q and that firms again have a constant marginal cost of 20, while incurring no fixed cost, but now assume that the firms are Bertrand competitors and have unlimited capacity.a. What is the one-period Nash equilibrium market price? Assuming that firms share the market evenly any time they charge the same price, what is the output and profit of each firm in this equilibrium?b. What is the output and profit of each firm if each agrees to charge the monopoly price?5. Return to Problem 4. Assume that the cartel is established at the monopoly price. Suppose one rm now deviates from the agreement assuming that its rival continues to charge monopoly price.a. Given the deviating firm's assumption, what price will maximize its profits?b. If the deviating firm's assumption is correct, how much will the profit of the cheating rm be?How much will be the profit of its non-cheating rival?6. Return again to the cartel in Problems 4 and 5. Now suppose that the market game repeated indefinitely. What is the discount factor (sigma) is necessary now in order to maintain the collusive agreement in an indenitely repeated setting?
Assume that you are going to buy a car work $25,000. You will be able to make a down payment of $3,000. The remaining 22,000 will be financed by the dealer. The dealer computes your monthly payment to be $547.47 for 28 months of financing.
Elizabeth Pie Company has been in business for 50 years and has developed a large group of loyal restaurant customers. Giant Bakery Inc. has made an offer to buy Elizabeth Pie Company for $5,000,000. The book value of Elizabeth Pie's recorded asse..
An electronic device is available that will reduce this year's labor cost by $10,000. The equipment is expected to last for 8 years. If labor costs increase at an average rate of 7% per year and the interest rate is 12% per year: a. What is the m..
.What are the equlibrium quantities (q1, q2 %u2026 ,q10)?. A-q1, q2 %u2026 ,q10 = 2B-q1, q2, %u2026 ,q9= 2 q10=1/2c-q1, q2, %u2026 ,q9= 3/2 q10=1/2d-q1, q2, %u2026 ,q9, q10= 3/2e- q1, q2, %u2026 ,q9= 3/4 q10=1/2f-q1, q2, %u2026 ,q9= 3 q10=1/2g-non..
Jeff holds $50,000 wealth which has a utility of 7.07 utils (assuming utility is the square root of wealth in thousand dollars). He considers investing this in a gamble which has a 0.6 probability of increasing his total wealth to $100,000 and 0.4..
Joe Holiday operated a business renting beach umbrellas this past summer. He operated the concession for 3 months. Joe knew that rain was frequent along this stretch of beach, but he was luck and enjoyed 60 rentable days this season. On each renta..
If the ratio of currency to transaction deposits is 2, the ratio of nontransaction deposits to transaction deposits is 5, the ratio of retail money-market funds to transactions deposits is 1, the ratio of required reserves to transactions deposits..
Consider an economy with just one technique available for the production of each good, food and cloth: Good Food Cloth labor per unit output 1 1 a. supposing land is unlimited but labor equals 100, write and sketch the production possibility frontier..
The Oil Price Information Center reports the mean price per gallon of regular gasoline is $3.79 with a population standard deviation of $0.18. Assume a random sample of 40 gasoline stations is selected.
The agency of Labor Statistics follows 5-steps to calculate Consumer Price Index. Determine three strengths and three weaknesses of the Consumer Price Index calculation.
Calculate Lorie's profit-maximizing output, price, and economic profit. B) Do you expect other firms to enter the singing lesson business and compete with Lorie C) What happens to the demand for Lorie's lessons in the long run
A U.S. firm is considering moving its production to Mexico. Its estimated production function is q = L 0.5 K 0.5 . The U.S. factor prices are w = r = 10. The Mexican factor prices are w* = 5, r* = 10. What is the optimal input bundle ( L,K..
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