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The U.S. government subsidizes flood insurance because those who want to buy it live in the flood plain and cannot get it at reasonable rates. What inefficiency does this create?
If long-term contract prevent the firm from changing the amount of trucking services it rents, should the firm increase, decrease, or leave constant the amount of labor employed? The goal is to maxi
Q1. What is total fixed cost? Q2. What happens to profit if output increases slightly? i. Increase ii. Decrease iv. Impossible to tell
What will be the output level for this firm if management sets price at $26 per unit, and rivals match the price decrease? Is this price feasible under current cost conditions?
Q1. Determine the price and quantity that would result under competitive conditions. Q2. The Chilean Fruit Growers are trying to organize a cartel among growers in their region. Assuming that all gr
Determine the price and output combination that the dominant firm would need to maximize profit for itself.
If the firm is engaging in price discrimination, what prices should be charged on each market and how many units should be sold on each market?
Assume that there is no external market for the output of the production division. How many units should be produced and what transfer price should be paid to the production division by the marketin
Discuss the necessary conditions to make price discrimination work and the best practices to use price discrimination to maximize profits while avoiding price wars.
Your best estimates indicate that, based on current tax rates, the monthly market demand for telecommunication services is given by Qd = 250 - 5P and the market supply (including taxes) is QS = 3P -
How does entry by another firm's substitute product typically affect the profit-maximizing price for a firm selling a single product. Does the optimal price increase, decrease, remain constant, or d
Consumers often have difficulty distinguishing brand-name products from cheap knockoffs, especially when making purchases over the web. This raises interesting questions about pricing and consumer b
What is the own price elasticity of demand when Px = $140? Is demand elastic or inelastic at this price? What would happen to the firm's revenue if it decided to charge a price below $140?
Suppose the marginal benefit of writing a contract is $60, independent of its length. Find the optimal contract length when the marginal cost of writing a contract of length L is:
As a manager of a chain of movie theaters that are monopolies in their respective markets, you have noticed much higher demand on weekends than during the week. You therefore conducted a study that
Recently there has been a drive to increase the production of alternative fuels from corn. The argument used by many is energy self-sufficiency. In light of the desire to reduce our use of foreign
Suppose a typical consumer's inverse demand for you camel milk is P = 11-2Q. If your cost of producing camel's milk is C(Q) = Q, determine the optimal number of bottles to sell in a single package a
Problem: Please explain whether the following goods or services are price elastic or inelastic in both the short run and long run.
Own-price elasticity of demand for American's economy class seats. Using months 1 & 5 and the mid-point method, my value = 5.57
Furthermore, what if the weak demand continued in the long run? What do you change about the short run condition if the firm is acting in the long run? How would this option benefit the firm?
When "economies of mass production exist does long-run average cost decrease as output increases or is it total cost decreases as output increases? Please explain.
Problem 1. Discuss in detail what are the differences between short and long run costs? Problem 2. For the short run, discuss what the relationship is between Cost Theory and Production Theory and t
Assignment: Airline flies only one route. Demand for each flight is Q=500-P. Cost of running each flight is $30,000 plus $100 per passenger. Q1. What is the profit maxmizing price the airline will ch
Suppose that Panasonic Electronics (maker of phones) and MCI (long distance telephone services) decide to merge. What argument would tell the United States Justice Department that it may be socially
Question. If a company can pay its fixed costs, but cannot pay its variable costs, then eventually it will go out of business. Question. If a company can pay its fixed and variable costs, then it will