Cho and Ginny are debating the use of coupons by grocery stores. Cho says, "The use of coupons in grocery stores represents a means of price discrimination. It's pure and simple. Coupons do reduce the price of groceries, but mostly to people who are less likely to buy at the full price." By contrast, Ginny contends, "Coupons do not constitute price discrimination. They simply represent a way of temporarily changing the prices of some grocery items. Coupons reduce the price for everyone, not just for those who are price sensitive." Economists generally agree with
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- Return to Figure 9.2. Suppose P0 is 10 and P1 is 11. Suppose a new firm with the same LRAC curve as the incumbent tries to bleak into the market by selling 4,000 units of output. Estimate from the graph what the new firms average cost of producing output would be. If the incumbent continues. to produce 6,000 units, how much output would the two films supply to the market? Estimate what would happen to the market price as a result of the supply of both the incumbent firm and the new entrant. Approximately how much profit would each firm earn? Figure 9.2 Economics of Scale and Natural MonoployAssume a perfectly competitive market. Draw the average total cost, average variable cost,marginal cost, and marginal revenue curves for a good. Determine the profit-maximizing levelof output given that the price of the good is above the minimum average variable cost butbelow the minimum average total cost. Is the profit at the chosen price point positive,zero, 0r negative? Shade the area representing profit. Assume a monopoly market. Draw the average total cost, marginal cost, marginal revenue,and demand curves for a good. At what price will the monopolist sell? What is theprofit-maximizing level of output at this price? Shade the area representing profit.Type out the correct answer ASAP with proper explanation 1.Assume inverse demand of P = 20 - 0.2Q where P is the market price and Q is the market demand. Also assume that there are 2 firms who both have a marginal cost of 2. (a) In a Cournot context, what is the equilibrium price, market quantity, and profit for each firm? (b) In a Bertrand context, what is the equilibrium price, market quantity, and profit for each firm?
- Suppose the following data represent the market demand for catfish: Price (per unit) $20 19 18 17 16 15 14 13 12 11Quantity demanded (units per day) 12 13 14 15 16 17 18 19 20 21Total revenue — — — — — — — — — —Marginal revenue — — — — — — — — — —Compute total and marginal revenue to complete the table above. At what rate of output is total revenue maximized? At what rate of output is MR less than price? At what rate of output does MR first become negative? Graph the demand and MR curves.a. Given the following demand functions for two market segments (in millions) P1 = 440 – 8Q1 P2 = 160 – 5Q2 TC = 500 +40Q Calculate the profit maximizing Quantities & corresponding Prices and profit level. Based on demand elasticities demonstrated that this monopolist is making use of the concept in its pricing strategy. b. Explain the reasoning behind the fact that a firm in a perfectly competitive market may continue to produce and sell its products at a loss within the short run but might not opt to do so in the long run. c. What factors in your view are behind monopoly power within markets and what in your view limits monopoly power within markets?Food prices in sports stadiums are notoriously high because there is a limit on the numberof vendors that can operate in the stadium, which is a barrier to entry. In 2017, the AtlantaFalcons, an American football team, lowered the barriers to entry by allowing more foodvendors into their stadium. If the market for food in the stadium follows our perfect marketassumptions, what might you expect happened after this change? Do not worry about theunderlying facts of each statement, only whether it makes economic sense given our model.(Select one or more.)(a) The price of food in the stadium decreased because of an increase in supply.(b) The price of food in the stadium decreased because of an increase in demand.(c) The quantity of food sold decreased because of a movement of the supply curve.(d) The quantity of food sold increased because of a movement along the demand curve.(e) Profit per vendor decreased because of lower food prices.(f) Profit per vendor increased because of greater…
- Suppose that YouYeet is one of over a dozen competitive firms in the Oviedo area that offers moving truck rentals. Based on the preceding graph showing the weekly market demand and supply curves, the price YouYeet must take as given is . Fill in the price and the total, marginal, and average revenue YouYeet earns when it rents 0, 1, 2, or 3 trucks during move-in week. Quantity Price Total Revenue Marginal Revenue Average Revenue (Trucks) (Dollars per truck) (Dollars) (Dollars) (Dollars per truck) 0 0 – 1 2 3 The demand curve faced by YouYeet is identical to which of its other curves? Check all that apply. Supply curve Marginal revenue curve Average revenue curve Marginal cost curveConsider two identical firms that face themarket demand p = 180 − q, where q = q_1 + q_2 is the total outputproduced by the two firms, and qi (i ∈ {1, 2}) is the output of firm i.The cost function of firm i is C_i(qi) = q_2i . Suppose, firm 1 chooses theprice p per unit of output first, and firm 2 will take the price p as givenand make its choice of output quantity q2.(a) Carefully write down Firm 2’s optimization problem and solve it.(b) Carefully write down Firm 1’s optimization problem and solve it.(c) What is the total output quantity produces by the two firms?Which profits will the firms make??Suppose that each firm in a competitive industry has thefollowing costs: Total cost: TC=50 + 1/2q^2 Marginal cost: MC=q where q is an individual firm’s quantity produced. The marketdemand curve for this product is Demand: QD = 120 – P where P is the price and Q is the total quantity of the good.Currently, there are 9 firms in the market. a. What is each firm’s fixed cost? What is its variable cost?Give the equation for average total cost. b. Graph average total cost curve and the marginal cost curvefor q from 5 to 15. At what quantity is average total cost curve atits minimum? What us marginal cost and average total cost at thisquantity? c. Give the equation each firm’s supply curve. d. Give the equation for the market supply curve for the shortrun in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market inthe short run? f. In this equilibrium, how much does each firm produce?Calculate each firm’s profit or loss. Is there incentive for…
- What is the marginal revenue for the following: qty: 100, 200 Price:39750, 39500 Revenue:3975000, 7900000 Total Cost: 2000000,4000000 Profits: 1975000,3900000 Marginal Revenue ___?, ___? Suppose that managers at Honda are deciding how to price the new Honda Accord. The managers estimate that their total costs increase by $20,000 for each car they produce. They also estimate the demand curve they face; it is described by the equation: Q = -0.4 P + 16,000, where Q represents the quantity of Honda Accords they will sell and P represents the price they charge in US dollars. We can re-write that demand curve as: P = 40,000 - 2.5 Q. Take every possibly quantity that the managers might choose between 0 and 7,000 in units of 100. For each possible quantity, calculate the associated price the managers would need to charge, the revenue they would earn, and the total costs. You can then calculate profits for each level of quantity. Highlight the cell that contains the highest value of profit.…wo firms A and B produce an identical product (Note: Industry Output = Q). The firms have to decide how much output qA and qB (Note: qA = Firm A Output; qB = Firm B Output) they must produce since they are the only two firms in the industry that manufacture this product. Their marginal cost (MC) is equal to their average cost (AC) and it is constant at MC = AC = X, for both firms. Market demand is given as Q = Y – 2P (where P = price and Q = quantity). Select any value for X between [21 – 69] and any value for Y between [501 – 999]. Using this information, calculate the Industry Price, Industry Output, Industry Profit, Consumer Surplus and Deadweight Loss under each of the following models: (a) Cournot Model error_outlineHomework solutions you need when you need them. Subscribe now.arrow_forward Question Two firms A and B produce an identical product (Note: Industry Output = Q). The firms have to decide how much output qA and qB (Note: qA =…Suppose that the quantity demanded for Windows 11 operating system is given by q = 320 − 2p, where p is the price of the Windows 11. Let us assume that the total cost of producing q units of Windows 11 is given by C(q) = 500 + 10q. a. Find marginal revenue, marginal cost, and average cost in terms of quantity q produced. Graphically illustrate the demand curve, marginal revenue curve, marginal cost curve, and average cost curve. b. What is the price that Microsoft charges for Windows 11? How many Windows 11 will Microsoft sell? How much profit it will make? Identify Microsoft’s profit maximizing price and quantity on your graph; and show the amount of profit that Microsoft will make. Please show all work and graphs, thank you!