Should warren implement his idea or not

Assignment Help Microeconomics
Reference no: EM13201179

Suppose that Jeffs friend Warren has an idea for product improvement at his firm but he is concerned that the idea may already be patented. If indeed the improvement is already patented, the firm holding the patent may sue Warren for infringing the patent and Warren would be fined if he loses the court case. Suppose that if he does not implement his idea, no product improvement will occur and his firms profit this year will be $20,000. If he implements the idea and he is found not to have infringed on someones patent, he could achieve a $50,000 profit this year. However, there is a 30% chance that a court will find that he infringed on someone's patent and fine him $40,000 (such that if he implements his idea and is found guilty of infringement, his payoff from implementing the idea will be the difference between the $50,000 profit he achieved and the $40,000 fine, which is $10,000). If Warrens utility function is \(U(I)=\sqrt{I}\) , should he implement his idea or not?

Reference no: EM13201179

Questions Cloud

What is jesses monthly economic profit : Jesse sells 400 candles per month at an average price of $5 per candle. Costs of supplies to produce and sell the candles are $500. Rather than producing and selling candles, Jesse could be working at a second job earning $800 per month.
Predict annual number of vcrs sold if income tax reduction : Suppose that the current market price of VCRs is $300, that average consumer disposable income is $30,000, and that the price of DVD players (a substitute for VCRs) is $500. Under these conditions annual U.S. demand for VCRs is 5 million per year.
Explain global economy development strategey : What exciting opportunities and critical challenges such a development pose for multinational corporations and U.S. citizens? -> How do we benefit from it?
Explain how many cubic inches of material do need : How many cubic inches of material do you need to make a solid rubber ball with a diameter of 3 in.? Round your answer to two decimal places.
Should warren implement his idea or not : Suppose that Jeffs friend Warren has an idea for product improvement at his firm but he is concerned that the idea may already be patented. If indeed the improvement is already patented, the firm holding the patent may sue Warren for infringing th..
What are the implications of market efficiency : What is Market Efficiency and what are the implications of Market Efficiency, in a global capital market, for a manager for the pricing of securities and investing corporations' money?
Explain oppose the reinstatement of a military draft : Is there convincing evidence that the proportion of American adults who oppose reinstatement of the draft is greater than 0.7? Use a significance level of 0.05. (For z give the answer to two decimal places. For P give the answer to four decimal pl..
Exchange rate between the canadian dollar and u.s. dollar : Suppose that the real interest rates are equalized in the two countries and that purchasing-power parity holds. Using the Fisher equation, what can infer about expected inflation in Canada and in the United States
Explain why is it necessary to study the order of operations : Why is it necessary to study the order of operations and the laws of operations before you begin solving equations?

Reviews

Write a Review

Microeconomics Questions & Answers

  Money and exchange rates

Evaluate the money multiplier? The central bank decides to increase the money supply (M1) by $200 million through an open market operation.  How much should it buy in bonds?

  What does ipo stand for?

What does IPO stand for? What are the primary and secondary markets for stocks? Are there advantages of going from a public corporation back to a private corporation?

  Theory in engineering economics

Why is a common analysis period necessary in comparing mutually exclusive alternatives by the "Present Worth Method", but is not necessary in the "Equivalent Uniform Annual Cash Flow method"?

  Determine if a market is an oligopoly

natural monopolies is a commonly used, potential solution to the problems presented by natural monopolies. a. Giving incentives to firms to become b. Regulating c. Breaking up firms that are d. Outlawing price discrimination by e. Refusing to grant p..

  Explain how supply and demand affect the prices of homes

As a manager of a financial considering business you have two financial planners, Phil and Francis. In an hour, Phil can make either one financial statement or answer ten phone calls,

  Explain japans slow economic growth

Discuss and explain japans slow economic growth over the past few decades and the projection that this will continue.

  Ireland was the first country

In March 2004, Ireland was the first country in the world to introduce an outright ban on smoking in workplaces. In the analyses below, when drawing your diagrams assume that workers can choose among only two products to consume at work, namely tobac..

  The maximum market price of of a competitive firm

Consider the problem of a competitive firm and what is the maximum market price at which the firm decides to supply zero?

  Determining total cost problem-cost per unit

Company A plans to produce 300,000 units next year, the production budget is: Compute the total cost and cost per unit when the unit production is changed to 315,000 units.

  Is this reasonable from an economic stand point

Based on their public statements, many policy makers would support government regulation of oil markets in order to compensate for the exhaustibility of oil as a resource. Is this reasonable from an economic stand point.

  Determine the tax after excise tax

Suppose the demand for a product is given by P = 60 - 2Q. The supply is given by P = 10 + 3Q. If a $10 per unit excise tax is levied on the buyers of a good, what will be the deadweight loss created by this tax.

  Discuss short and long run costs

Discuss short and long run expenses. For the short run discuss the relationship in cost and production theory and the idea of diminishing returns.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd