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Consumers in a given industry have the demand curve: P = 1000 – 8*Q Production involves an upstream manufacturer, who incurs a constant marginal cost of $20 per unit, selling to a downstream retailer. The retailer’s additional cost (beyond the price paid to the manufacturer) is for sales labor, which costs $20 per unit. The retailer sells the product directly to consumers. Assume that the manufacturer and retailer are both monopolists in their respective sectors.
a) What is the final price that the retailer will charge consumers?
b) If the manufacturer can offer the retailer a two-part tariff, what is the optimal fixed fee that it should charge? Assume that the retailer will accept any contract that gives him at least zero profits.
c) If the firms are allowed to merge, what prices will the merged entity charge consumers?
Explain why the price elasticity of demand is generally a negative number, except in the cases where the demand curve is perfectly elastic or perfectly inelastic. What would be implied by a positive price elasticity of demand?
In the Heckscher-Ohlin model, after opening up to trade, presume a country exports a capital intensive good. What happened to the capital intensity of production in the capital intensive good? What happened to the capital intensity of production in t..
describe the short term effect in terms of the mix of production inputs and the overall level of output in detail of
1.for each of the following pairs of goods or services identify the one for which the price elasticity of demand is
Homothetic Preferences. The preferences represented by >= are homothetic if for any two bundles X and Y such that X >= Y, we have tX >= tY for all t > 0. Solve the consumer's problem and deduce the demand functions.
what is an example of either a proposed or successful vertical horizontal or conglomerate merger with which you are
Choose an existing good or service from Will Bury's Price Elasticity, Incremental expenses, or Thomas Money Service Corporation scenarios, or choose an existing business with which you are familiar.
explain the meaning and importance of high frequency trading with a literature searchtopic to focus on us equities
Countercyclical policy in recessions has typically involved increasing in incentives for investments, often through increases in the investment tax credit.
Explain how the following statements relate to the AD-AS model? The FEd expected a weaker dollar to help increase exports. The above actions by the Fed may cause inflation to rise to levels that most would consider unacceptable.
Presume that three risk-neutral bidders are interested in purchasing a Princess Beanie Baby. The bidders (numbered 1 through 3) have valuations of $12, $14, and $16, respectively. The bidders will compete in auctions as described in parts (a) and (b)..
output per worker yt 4kt 13 the saving rate is 30 percent and the depreciation rate is 13.3 percent. calculate the
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