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- A firm has $1.5 million in sales, a Lerner index of 0.57, and a marginal cost of $50, and competes against 800 other firms in its relevant market. a) What price does this firm charge its customers? b) By what factor does this firm mark up its price over marginal cost? c) Do you think that this firm enjoys much market power? Explain.3) Why would firms advertise? Give some examples of a market structure where firms need to advertise to gain a fair advantage over their rivals and also identify the type of market structure? Give typing answer with explanation and conclusionCarrot Computers and its competitors purchase touch screens for their tablet computers from several suppliers. The six makers of touch screens have market shares of, respectively, 19 percent, 18 percent, 14 percent, 16 percent, 20 percent, and 13 percent. a. What is the Herfindahl index for the touch screen manufacturing industry? b. By how much would a proposed merger between the two smallest touch screen makers increase the Herfindahl index? Would the government be likely to challenge that proposed merger? c. If Carrot Computers horizontally merges with its competitor Blueberry Handhelds, by how much would the Herfindahl index change for the touch screen industry?
- A firm has #1.5million in sales, a Lerner index of 0.57, a marginal cost of #50, and competes against 800 other firms in its relevant market. a. What price does this firm charge its customers. b. By what factor does this firm mark up its price over marginal cost c. Do you think this firm enjoys much market power? Explain.3) There are three identical firms in the market research industry. The demand is 1 – Q, where Q = q1 + q2 + q3. The marginal cost is zero. c. Show the result on profits if all three firms were to merge10. Based on the available data, the market elasticity of demand for your firm's product is -2.0. The marginal cost is constant at $50 and you compete against 17 other firms in a Cournot Oligopoly The average total costs are $375. What is the optimal price per unit?
- When a company has market power, it is _____ in its market? 1.Not able to impact market equilibrium price 2.One of many small companies 3.Not a price taker 4.A producer of non-differentiated products6. A dominant firm sells CPU at $5 with cost at $4. If a computer maker orders 1,000 units of them, it will enjoy 30% off discount. How much does the computer maker pay for 1,000 units of CPU if it enjoys the bundle discount? What is the range of cost that will support a new firm of CPU entering into the market?Question 6 (a) Why is Perfect Competition considered to display high level of economic efficiency? (b) How does monopoly result in a dead-weight loss? Illustrate with diagram. (a) How is oligopoly different from monopolistic competition? (b) Illustrate and explain how the oligopolistic firms determines their collective profit by maximizing price and output levels when they collude and act like a cartel (monopoly). Question 7 (a) What are the main causes of market failure? Give one example and illustrate using a diagram. (b) Explain the difference between private costs and social costs. (c) Government of Country X is considering implementing a tax on fizzy drinks. Using a demand and supply diagram, illustrate what effect the tax will have on the market of fizzy drinks. (d) For what purposes does government use taxes-both at micro and macroeconomic level?
- Table 17-9Only two firms, Acme and Pinnacle, sell a particular product. The table below shows the demand curve for their product. Each firm has the same constant marginal cost of $10 and zero fixed cost. Price Quantity Total Revenues 70 0 0 65 100 6500 60 200 12000 55 300 16500 50 400 20000 45 500 22500 40 600 24000 35 700 24500 30 800 24000 25 900 22500 20 1000 20000 15 1100 16500 10 1200 12000 5 1300 6500 0 1400 0 Refer to Table 17-9. If Acme and Pinnacle operate to jointly maximize profits and agree to share the profit equally, then how much profit will each of them earn? Group of answer choices $9,000 $8,750 $8,000 $6,750Table 17-9Only two firms, Acme and Pinnacle, sell a particular product. The table below shows the demand curve for their product. Each firm has the same constant marginal cost of $10 and zero fixed cost. Price Quantity Total Revenues 70 0 0 65 100 6500 60 200 12000 55 300 16500 50 400 20000 45 500 22500 40 600 24000 35 700 24500 30 800 24000 25 900 22500 20 1000 20000 15 1100 16500 10 1200 12000 5 1300 6500 0 1400 0 Refer to Table 17-9. If Acme and Pinnacle operate to jointly maximize profits, then what is the price? Group of answer choices $45 $40 $35 $30Table 17-9Only two firms, Acme and Pinnacle, sell a particular product. The table below shows the demand curve for their product. Each firm has the same constant marginal cost of $10 and zero fixed cost. Price Quantity Total Revenues 70 0 0 65 100 6500 60 200 12000 55 300 16500 50 400 20000 45 500 22500 40 600 24000 35 700 24500 30 800 24000 25 900 22500 20 1000 20000 15 1100 16500 10 1200 12000 5 1300 6500 0 1400 0 Refer to Table 17-9. How much less do each of these firms earn in the Nash equilibrium than if they jointly maximize profits? Group of answer choices $250 $500 $750 $1000