6 Assume that Intel can be treated as the dominant firm in the market for computer chips . What three basic economic factors determine the elasticity of demand confronted by Intel
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6 Assume that Intel can be treated as the dominant firm in the market for computer chips . What three basic economic factors determine the
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- 2. A car importer was preparing in September 2021 to accept the 2022 models. In order to clear the stock of cars of older models, it offered in August 2021 a discount of €1,750 from the normal price of €52,500. As a result, sales increased from the average level of 50 units to 75 units in the month of August. (a) On the basis of the normal price, calculate the price elasticity. b) What discount had to be made in September in order to sell the remaining stock of 90 cars of model 2021?15. Given that the U.S. government mandates the use of ethanol as a partial substitute for gasoline (10% by volume), and that ethanol manufactured in the U.S. is made from corn; how will the supply of ethanol, the demand for ethanol, as well as its equilibrium price and quantity, be affected by the following event: Development of a new highly efficient method of storing electrical energy (e.g. a light weight, yet structurally strong, composite material that can serve as the car body and store electricity as well). c) Demand will decrease. i) Equilibrium Price will decrease. a) To the extent the amount of ethanol additive in gasoline is determined by government fiat, neither demand for not supply of ethanol will be affected unless the government changes its requirements. g) Equilibrium Quantity will decrease. j) Equilibrium Price and Quantity will remain unchanged. h) Equilibrium Price will increase. e) Supply will decrease. d) Supply will increase. b) Demand will increase. f)…15. Given that the U.S. government mandates the use of ethanol as a partial substitute for gasoline (10% by volume), and that ethanol manufactured in the U.S. is made from corn; how will the supply of ethanol, the demand for ethanol, as well as its equilibrium price and quantity, be affected by the following event: Development of a new highly efficient method of storing electrical energy (e.g. a light weight, yet structurally strong, composite material that can serve as the car body and store electricity as well).will have multiple answers f) Equilibrium Quantity will increase. a) To the extent the amount of ethanol additive in gasoline is determined by government fiat, neither demand for not supply of ethanol will be affected unless the government changes its requirements. b) Demand will increase. c) Demand will decrease. h) Equilibrium Price will increase. i) Equilibrium Price will decrease. g) Equilibrium Quantity…
- H11. Assume a firm in a competitive market is outputting 500 units and sells each unit for 4 dollars. The average total cost is 3 dollars. What is the total profit? Suppose when a monopoly charges 5 dollars, it sells 2 units of output. When it charges 4 dollars it sells 3 units of output. What is the Marginal Revenue of the 4th output?Assume that a firm accepts the following price_demand relationship as being a realistic representation of its market: d=800-10p where p must be between $20 and$70 a. How many units can the firm sell at the $20 per-unit price? At the $70 per-unit price? b. By how many units does a $1 increase decrease demand? c. Which pricing alternative the business is considering maximizes revenue? Group of answer choices $40 $30 $502b. Firm’s market power: an explanation for a firm’s pricing behavior. The economists contribute an argument to the theory of the firm that: firms in different markets, and even different firms within the same market, are likely to have different degree of market power. And in turn, a firm’s market power is believed to help its capacity to charge relatively high prices compared to their rivals without losing all of its customers. What is your understanding of the concept of market power? What are the factors determining a firm’s market power? What is the extent of a firm’s market power in perfectly competitive markets versus monopolistically competitive markets? Observe an online market platform and search for a real-life example of a firm in a competitive market charging different price levels from its rivals (the competitors who are selling similar products). Give an explanation of the relevance of the market power to the firm’ pricing decision.
- the annual global market share of Pepsi and Coke for the last five years on average. COKE 49.6 PEPSI 46.2 OTHERS 4.2Under what market structure do Pepsi and Coke operate? How can you explain the pricing behavior of Pepsi and Coke? Given the obvious market share of both Pepsi and Coke, on what grounds would you justify the multi-billion-dollar annual advertising spending by those two companies?Best5) Describe the basic characteristics of the monopoly model and explain how these characteristics affect the ability of a monopolist to earn positive economic profits, both in the short run and over time.9. Suppose that the downstream market for widgets is characterized by the inverse demand curve P = 100 - Q. Widget retailer is controlled by the monopolist WR Inc., which obtains its widgets from the monopoly wholesaler WW Inc. at a wholesale price of ww per widget, WW inc. obtains the widgets in turn from the monopoly manufacturer WM ltd. at a manufacturing price of wm per widget. WM Inc. incurs marginal costs of $10 per unit in making widgets. WW and WR each incur marginal costs of $5 in addition to the prices that they have to pay for widgets. What is the equilibrium widget price to consumers, P, the equilibrium wholesale price ww and the equilibrium manufacturing price wm? What is the profit earned by each firm at these prices? Show that vertical integration by any two of these firms increases profit and benefits consumers. Show that integration of all three firms is even more beneficial.
- 8. Suppose there are two firms in the market. The market demand is Q=100-p and the marginal cost of production is constant at 40. What is the outcome of price and quantity and the total welfare if those two firms compete like perfect competition? What is the outcome of price and quantity and the total welfare when those two firms merge into a monopoly? What are the pre-merger HHI, post-merger HHI and change in HHI? How does the Horizontal Merger Guideline 2010 classify this proposed merger?Coke 49.6% Pepsi 46.2% Others 4.2% Under what market structure do Pepsi and Coke operate? How can you explain the pricing behavior of Pepsi and Coke? Given the obvious market share of both Pepsi and Coke, on what grounds would you justify the multi-billion-dollar annual advertising spending by those two companies?6 Suppose that chocolate is a monopolistically competitive industry in both the United States and the EU. Suppose that in the past neither the US nor the EU have allowed chocolate imports from each other. Both now allow free trade in chocolate. The result is that the demand curve for each firm in the United States will be a) More elastic and also that of the EU. b) More elastic and, therefore, less elastic than the EU. c) Least elastic and, therefore, the most elastic that of the EU. d) Answers (B) and (C) may be correct.