From the airlines' perspective, amenities competition is preferable to price competition because revenues are not adversely affected and it is easier to determine the strategies of one's competitors. True or False
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From the airlines' perspective, amenities competition is preferable to price competition because revenues are not adversely affected and it is easier to determine the strategies of one's competitors.
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- The Able Manufacturing Company and Better Bettors, Inc. are rival firms in the production of a calculator used by horse racing fans for handicapping (determining betting strategies). Each firm has a fixed cost of $100 and a MC = $10 in producing calculators. The demand for the industry’s product is: Q = 900 – 5P, where P is the market price and Q = Q1 + Q2. If each firm must choose how many calculators to produce and sell without knowing of its rival’s production decision, what will be the Cournot equilibrium price and quantities produced? Calculate the profit for each firm.Your software startup has just completed the latest version of BrainType, a mind-reading word processor that translates thoughts into text. Since you are the cutting-edge frontier, you have no direct competitors. As marketing manager, you must decide how to price BrainType. You commission a study that suggests that there are two markets: professional writers and dabbling hobbyists. There are one million professionals and two million hobbyists. Professionals are willing to pay up to $400 and hobbyists up to $100 for the full-feature version. A scaled-down version is worth $50 to hobbyists and nothing to professionals. Both versions are essentially free to produce. (a) What prices of the two versions generate the most revenue? (b) Suppose that, instead of the scaled-down version, the firm offers an intermediate version worth $200 to professionals and $75 to hobbyists. What prices generate the most revenue now? Is the firm better off selling the intermediate or scaled-down version?True or False: Horizontal mergers between firms producing distant substitutes are more likely to harm economic welfare.
- As a basic rule of thumb, business owners should differentiate their products as much as possible when: a) price competition is intense. b) price competition is subdued. c) costs are low. d) costs are high.The citizens of Ruritania are prodigious consumers of marmite. They can buy it from one of two sellers: Omni Corp (OCP) or the Umbrella Corporation. The marmite sold by each is identical to the other but for color of the packaging. OCP sells its marmite in a red package while Umbrella sells its marmite in a green package. Competition between the two rms follows the Cournot model. The inverse demand curve for marmite is p = 50 - q; where q is the total amount of marmite produced by OCP and Umbrella.The production costs consists of two components. The rst is processing, while the second comes from the price of the main ingredient. OCP has a constant marginal cost of processing of $2 a unit while Umbrella has a constant marginal processing cost of $4 a unit. The main ingredient of marmite is Soylent green which is sold by a monopolist, Soylent Corp. Soylent Corp enjoys a constant marginal cost of production for Soylent Green of $0 a unit. It requires 1 unit of Soylent…A new entrant, Bargain Airways, cuts air fares between Eastwich and Westwich by 20 percent. Biggie Airlines, which has been operating on this route, responds by cutting fares by 35 percent. What does Biggie hope to achieve?
- During 2001, many European markets for mobile phones reached saturation. Because of this, mobile phone operators started to shift their focus from growth and market share to cutting costs. One way to do this is to reduce spending on international calls. These calls are routed through network operating companies called carriers. The carriers charge per call-minute for each destination, and they often use a discount on total business volume to price their services. A mobile phone operator must decide how to allocate destinations to carriers.V-Mobile, a mobile phone operator in Denmark, must make such a decision for a T-month planning horizon when it has C carriers to choose from, D destinations for its customers’ calls, and there are I price intervals for a typical carrier. (These intervals define a carrier’s discount structure.) The inputs include the following: The price per call-minute for destination d from carrier c in price interval i in month t The (forecasted) number of…During 2001, many European markets for mobile phones reached saturation. Because of this, mobile phone operators started to shift their focus from growth and market share to cutting costs. One way to do this is to reduce spending on international calls. These calls are routed through network operating companies called carriers. The carriers charge per call-minute for each destination, and they often use a discount on total business volume to price their services. A mobile phone operator must decide how to allocate destinations to carriers.V-Mobile, a mobile phone operator in Denmark, must make such a decision for a T-month planning horizon when it has C carriers to choose from, D destinations for its customers’ calls, and there are I price intervals for a typical carrier. (These intervals define a carrier’s discount structure.) The inputs include the following: The price per call-minute for destination d from carrier c in price interval i in month t The (forecasted) number of…In some industries, securing the adoption of an industry standard that is favourable to one’s own product is an enormous advantage. It can involve marketing efforts that grow more productive the larger the product’s market share. Microsoft’s Windows is an excellent example.2 The more customers adopt Windows, the more applications are introduced by independent software developers, and the more applications that are introduced the greater the chance for further adoptions. With other products the market can quickly exhibit diminishing returns to promotional expenditure, as it becomes saturated. However, with the adoption of new industry standards, or a new technology, increasing returns can persist.3 Microsoft is therefore willing to spend huge amounts on promotion and marketing to gain this advantage and dominate the industry. Many would claim that this is a restrictive practice, and that this has justified the recent anti-trust suit against the company. The competitive aspects of this…
- Based on the best available econometric estimates, the market elasticity of demand for your firm’s product is −2.5. The marginal cost of producing the product is constant at $225, while average total cost at current production levels is $300.Determine your optimal per unit price if:Instructions: Enter your responses rounded to two decimal places.a. you are a monopolist. $ b. you compete against one other firm in a Cournot oligopoly. $ c. you compete against 19 other firms in a Cournot oligopoly. $ Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.The market for internet access in Olympus has two identical providers – Alcyoneus and Thanatos. At the current Cournot equilibrium market price of $85 a month, each firm sells 250 connections. If Thanatos decides to sell 251 units instead, Thanatos’ profits ____ and Alcyoneus’s profits _____ A. will increase; will increase. B. will increase; will decrease or stay the same. C. will decrease; will stay the same. D. will decrease; will decrease. E. will decrease; will increaseBased on the best available econometric estimates, the market elasticity of demand for your firm’s product is –2. The marginal cost of producing the product is constant at $150, while average total cost at current production levels is $225.Determine your optimal per unit price if:Instructions: Enter your responses rounded to two decimal places.a. You are a monopolist.$ b. You compete against one other firm in a Cournot oligopoly.$ c. You compete against 19 other firms in a Cournot oligopoly.$