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Suppose that c=0, the discount factor is ρ (rho), and demand is constant elasticity, y = p^-η. (a) Write the equilibrium conditions for the competitive firm and the monopoly in this case. (b) For the monopoly equilibrium condition to be sensible, what restriction must be imposed on η? Provide the economic explanation for this restirction. (c) Compare the level of period-0 sales under competition and monopoly.
A 40-acre Christmas tree plantation produces $3,500 of net revenue per acre every 9 years. If the interest rate is 8%, what is the maximum amount money you should be willing to pay to acquire the plantation when the first cash flow is 9 years away?
An end- of- aisle price promotions changes the price elasticity of a good from - 2 to - 3. If the normal price is $ 10, what should the promotional price be?
The new Star Wars movie "Make Room for Yoda" is opening at the local cineplex on Friday. The cineplex announces that no passes or discounts will be honored for "Make Room for Yoda". Cineplex management believes that demand for the new movie will
What is the highest possible total revenue that the team can hope to collect
1. contrast the ideas of nominal gdp also real gdp. explain why there is one more reliable than the other for comparing
Decreasing returns to scale imply that. When average cost is falling, marginal cost is ____________ and when average cost is rising, marginal cost is _________________. If the price of an input changes, there will be a new expansion path. As long a..
Design an alternative author-compensation scheme under which the author and the publisher would pick the same price.
Suppose that currently the government provides everyone with a guaranteed income of $10,000 per year, but this benefit level is reduced by $1 for each $1 of work income. The government is considering changing this policy so that the benefit level is ..
explain why the actual increase in M-1 will be smaller than that indicated by the over smplified multiplier.
KRDY-FM is contemplating a T-Shirt advertising promotion. Monthly sales data from T-shirt shops marketing the "Listen to KRDY-FM" design indicates that: How many t-shirts could KRDY-FM sell at $15 each? Calculate the point price elasticity of demand ..
Which leads to higher interest rates, which leads to higher output? Which leads to higher inflation? Which represents a more hawkish Fed? Which represents a more dovish Fed?
The small economy of Pizzania produces three goods (bread, cheese, and pizza), each produced by a separate company. The bread and cheese companies produce all the inputs they need to make bread and cheese, respectively. Calculate GDP as the value add..
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