Entry barriers, profit remittance barriers, and government controls are all part of the fourth screening.third screening.second screening.first screening.
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Entry barriers, profit remittance barriers, and government controls are all part of the
fourth screening.
third screening.
second screening.
first screening.
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- Advertising can be a signal of qualitya. if advertising is freely available to all firms.b. if the benefit of attracting customers is greaterfor firms with better products.c. only if consumers are irrationally attracted toproducts they see advertised.d. only if the content of the ads contains credibleinformation about the products.Firms A and B are contemplating whether or not to invest in R&D. Each has two options: “Invest” and “Abstain.” A firm that invests will invent product X with a probability of 0.5, whereas a firm that abstains is incapable of invention. Investment costs $6. If a firm doesn’t invent X, it makes $0 in revenue. If a firm invests and is the only one to invent X, it becomes a monopolist and generates $20 in revenue. If both firms invent X, each firm becomes a duopolist, and generates $8 in revenue. Revenues are gross figures (i.e. they are not net of investment costs), and there are no costs besides investments costs (i.e. no variable cost of production etc.). The firms are risk-neutral entities, and are uninformed of each other’s investment decisions. What is Firm A’s expected gross revenue (i.e., not net of investment costs) from investing, assuming Firm B invests (i.e. conditional on Firm B investing)? A) -$1B) $2C) $7D) $8E) None of the aboveFirms A and B are contemplating whether or not to invest in R&D. Each has two options: “Invest” and “Abstain.” A firm that invests will invent product X with a probability of 0.5, whereas a firm that abstains is incapable of invention. Investment costs $6. If a firm doesn’t invent X, it makes $0 in revenue. If a firm invests and is the only one to invent X, it becomes a monopolist and generates $20 in revenue. If both firms invent X, each firm becomes a duopolist, and generates $8 in revenue. Revenues are gross figures (i.e. they are not net of investment costs), and there are no costs besides investments costs (i.e. no variable cost of production etc.). The firms are risk-neutral entities, and are uninformed of each other’s investment decisions.Which of the following statements are correct? I. If Firm A and Firm B invest, there is a 0.25 probability that Firm A will become a monopolist and make $20 in revenue.II. If Firm A and Firm B invest, there is a 0.25 probability that Firm A…
- Firms A and B are contemplating whether or not to invest in R&D. Each has two options: “Invest” and “Abstain.” A firm that invests will invent product X with a probability of 0.5, whereas a firm that abstains is incapable of invention. Investment costs $6. If a firm doesn’t invent X, it makes $0 in revenue. If a firm invests and is the only one to invent X, it becomes a monopolist and generates $20 in revenue. If both firms invent X, each firm becomes a duopolist, and generates $8 in revenue. Revenues are gross figures (i.e. they are not net of investment costs), and there are no costs besides investments costs (i.e. no variable cost of production etc.). The firms are risk-neutral entities, and are uninformed of each other’s investment decisions. The “research and development” game is best analyzed as a simultaneous move game, because the parties lack information about each other’s investment decisions. Which game (in the attached image)describes the “research and development game”…Firms A and B are contemplating whether or not to invest in R&D. Each has two options: “Invest” and “Abstain.” A firm that invests will invent product X with a probability of 0.5, whereas a firm that abstains is incapable of invention. Investment costs $6. If a firm doesn’t invent X, it makes $0 in revenue. If a firm invests and is the only one to invent X, it becomes a monopolist and generates $20 in revenue. If both firms invent X, each firm becomes a duopolist, and generates $8 in revenue. Revenues are gross figures (i.e. they are not net of investment costs), and there are no costs besides investments costs (i.e. no variable cost of production etc.). The firms are risk-neutral entities, and are uninformed of each other’s investment decisions. The “research and development” game is best analyzed as a simultaneous move game, because the parties lack information about each other’s investment decisions. Find the Nash Equilibria (or Equilibrium) of the “research and development”…You are considering entry into a market in which there is currently only one producer (incumbent). If you enter, the incumbent can take one of two strategies, price low or price high. If he prices high, then you expect a $60K profit per year. If he prices low, then you expect $20K loss per year. You should enter if you believe demand is inelastic. you believe the probability that the incumbent will price low is greater than 0.75. you believe the probability that the incumbent will price low is less than 0.75. you believe the market size is growing.
- Suppose there are two types of people, high risk (H) and low risk (L) with utility function U(c) = c0.5 Each has income (=consumption) of $100. The high risk people are 10% of the population and have a 75% chance of getting cancer in which case their income would be zero. The low risk people are the remainder of the population and have a 25% chance of getting cancer and hence zero income. The private insurance industry is perfectly competitive. (a) Suppose private insurers are able to distinguish the two types. What market price would emerge for each risk type? How much insurance would each type purchase?A monopolist earns $30 million annually and will maintain that level of profit indefinitely, provided that no other firm enters the market. However, if another firm enters the market, the monopolist will earn $30 million in the current period and $15 million annually thereafter. The opportunity cost of funds is 10 percent, and profits in each period are realized at the beginning of each period. a. What is the present value of the monopolist’s current and future earnings if entry occurs? b. If the monopolist can earn $16 million indefinitely by limit pricing, should it do so? Explain.Multiple choice 14. Mark is a Canadian lumberjack whose income increases from $1,200 per week to $1,500 per week. If his demand for restaurant meals rises from 2 to 4 per week then...Select one: a.Ey = 3 b.Ey = 0.5 c.Ey = 2.5 d.Ey = -1 15. Which of the following would help support the argument for legalizing drugs?Select one: a.None of the other choices b.The demand curve for illegal drugs in relatively elastic c.The demand curve for illegal drugs is relatively inelastic d.The demand curve for illegal drugs is perfectly elastic 16. The Philippines Government is thinking of increasing taxes on gasoline and cigarettes in order to raise tax revenue. This would...Select one: a.None of the above are correct b.Be a good idea if gasoline and cigarettes are inelastic goods c.Be a poor idea because people would stop consuming these goods d.Be a good idea if gasoline and cigarettes are elastic goods 17. If Exy > 0 then goods x and y areSelect one: a.Substitutes b.Normal goods c.Inferior goods…