a) Theoretically derive and explain the efficientmarkets hypoth esis. b) Distin guish between informational efficiency, valu ation efficiency and allocative efficien cy. c) Explain the jointhypothesis problem in relation to testing efficien cy of fin ancial markets.
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- True / False4. Advertising must be socially wasteful because advertising simply adds to the cost of producing a product.5. In the long run, firms in monopolistically competitive markets produce at the minimum of their average total cost curves.1.) Suppose you have 5 identical Bertrand (price-competing) firms with MC for each equal to $10. The market elasticity of demand is -2.0. What is the market price? a. none of the available options. b. $10 c. $12.50 1d. 0.71. 2.) Reconsider the previous question. Suppose 2 new price-competing firms enter the market. What will be the market price? a. none of the available options. b. $11.11 c. $9.09. d. $10.1.Amalgamated Popcorn, Inc. sells bags of flavored gourmet popcorn in a popular mall. As shop owner and operator, you have observed that weekly popcorn sales are well-described by the demand equation: Q = 1,200 -800P + 2.0A, where A denotes advertising weekly spending (in dollars). You are currently charging $1.50 per bag of popcorn (for which the marginal cost is $.75) and spending $500 per week on advertising. a) Compute the store’s price elasticity and advertising elasticity. b) Check whether your current $1.50 price is profit maximizing. If not, determine the store’s optimal quantity and price. c) Should the store consider increasing its advertising spending? Why or why not.
- A small town is served by many competingsupermarkets, which have the same constantmarginal costs.a. Using a diagram of the market for groceries, showthe consumer surplus, producer surplus, and totalsurplus.b. Now suppose that the independent supermarketscombine into one chain. Using a new diagram,show the new consumer surplus, producer surplus,and total surplus. Relative to the competitivemarket, what is the transfer from consumers toproducers? What is the deadweight loss?Ma1. Problem II Q1. If adopting a single price strategy (same price to all buyers), what price will be charged and what profit will be made? Explain Q2. If adopting a fwo-part pricing strategy. (i) what price will be charged (specify the Fixed fee and the Per-unit fec). (ii) what profit will be made?In figure 5-2, this firm will: A- Produce Q1,charge P1 B- Produce where LAC=MR and charge the highest price allowed by the demand curve C-Produce where LMC=MR and charge the highest price allowed by the demand curve D-Produce Q2,charge price P2 Please give me correct answer otherwise i give down vote Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.
- Some firms have an incentive to advertise because they sell a a. homogeneous product and charge a price equal to marginal cost. b. homogeneous product and charge a price above marginal cost. c. differentiated product and charge a price equal to marginal cost. d. differentiated product and charge a price above marginal cost. For the economy as a whole, spending on advertising comprises about what percent of total firm revenue? a. 0.5 b. 2 c. 10 d. 20 Firms that spend the greatest percentage of their revenue on advertising tend to be firms that sell a. industrial products. b. homogeneous products. c. consumer goods for which there are no close substitutes. d. highly-differentiated consumer goods. Firm A produces and sells in a market that is characterized by highly differentiated consumer goods. Firm B produces and sells industrial products. Firm C produces and sells an agricultural commodity.…A small town is served by many perfectly competingsupermarkets, which have constant marginal cost. In the previous problem set you used a diagram to showthe (long-run) equilibrium price and quantity, the (non-existence of) the deadweight loss and the consumerand producer surpluses.a. Now suppose that the supermarkets combine to form one chain. Using a new diagram, show theequilibrium price and quantity. What is the deadweight loss in this case? Indicate the consumer andproducer surplus, how have they changed?b. Assume that the newly formed supermarkets chain can perfectly price discriminate (hint: it meansthey can charge each consumer the maximum price they he/she is willing to pay – think about ourexperiment in the lecture deriving the demand curve for your favourite singer’s tickets). How muchwill be sold and what will be the deadweight loss in this case? Discuss how policymakers approachthese sorts of situations, and whyQuestion #5What is the MC=MR Profit Maximization point? What quantity should Delicious Deserts be producing at 'and' what price should they be charging to maximize their profits? Question #6 Why isn't it a good idea for them to produce and sell as many cakes as they can? Is it more profitable to sell less cakes at this current stage of their business? Question #7Do you have any other recommendations for Delicious Deserts to increase their revenues, profits, market share, and client retention?
- Firms J and K produce compact-disc players and compete againstone another. Each firm can develop either an economy player (E)or a deluxe player (D). According to the best available marketresearch, the firms’ resulting profits are given by the accompanyingpayoff table.a. The firms make their decision independently, and each is seeking itsown maximum profit. Is it possible to make a confident predictionconcerning their actions and the outcome? Explain.Firm KE DE 30, 55 50, 60 Firm JD 40, 75 25, 50b. Suppose that firm J has a lead in development and so can move first.What action should J take, and what will be K’s response?c. What will be the outcome if firm K can move first?What is a tie-in sale? How might it reduce competition and when might it be acceptable?What is the relationship between product differentiation and monopolistic competition?