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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 able to produce an old technology, vO, and a new technology, vN . However, the production of new technology requires an innovation cost of I > 0. Note that old and new technology can be nondurable (only last one period) or durable (it lasts for two periods). Hence, the cost of producing nondurable technology, cND = 0, is considerably lower than the cost of durable technology, CD = 3. There is only one consumer in period 1 who seeks to buy a computer for the two periods of her life. In period 2, one additional consumer enters the market and seeks to buy a computer. Both consumers have the same gain from the quality of the technology embedded into the product they buy in period t. That is, V N = 7 and V O = 5 for new and old technology, respectively. The structure of the two-period, two-firm game is as follows: In period 1 firm 1 sells the old technology product and therefore has to decide which price to charge (p1) and whether to produce a durable (D) or a nondurable (ND) product. In the second period, firm 2 obviously chooses to produce a nondurable good (since the world ends at the end of period 2) and hence has to decide whether to invest in adopting the newer technology and price (p2).
Assume that the reserve requirement is 5%. All other things equal, will the money supply expand more if the Federal Reserve busy $2,000 worth of bonds or if someone deposits in a bank $2,000 that he had been hiding in his cookie jar? If one creates m..
Production possibilities tables for China and the United States. Assume that before specialization and trade the optimal producer mix for China is alternative B and for the United States is Alternative U.
Which country has comparative advantage in producing cars? Which country has comparative advantage in producing helicopters - Which country has absolute advantage in producing cars? Which country has absolute advantage in producing helicopters?
determine whether the following linear programming problem is infeasible unbounded or has multiple optimal solutions.
If Rd = 300 - 40 iff, given the information above, what is the market clearing federal funds rate? Assume that this is the target for the federal funds rate. Show all work. NOTE: To calculate the market clearing federal funds rate, you first need Rs...
Winston Churchill once said that democracy is the worst form of government except for all others. What did he mean in microeconomic terms Would a more viable democratic system add to or reduce the ability of government.
1. organize yourselves into groups. each group is to have two or three members.2. brainstorm and select a well-defined
What factors make the Fed independent from politics? Why is there so much political pressure on the Fed, despite its independence - How does the Fed work to protect itself from political pressure?
Each student will select a topic from the Reading sources, mention on page two in this syllabus. The objective of the paper will be to present a professional position of your selected topic as it relates to the reading of both the textbook chapters a..
Who has the absolute advantage in catching fish? What is Friday’s opportunity cost of gathering one coconut?
Read the article "FDI into Africa on the up" from Ernst and Young and discuss on the following questions by writing 1 and half pages with proper citation with own words. § What is the impact of increasing FDI into Africa on the global economy? § If y..
How does the market adjust in the long run when firms are earning short-run economic profits? How does this affect the short-run supply curve?
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