g the average income of a monopoly.
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A: The above question is from the topic: Competitive Pricing The answer to the question is given below:
An engineering student argues with the professor regarding the average income of a
The engineering student
The teacher
The two (the engineering student and the professor)
Neither
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- Kevin’s friend, Sam, runs a septic tank repair business. Your research shows that the following price and demand for servicing a tank: Current Price: $300New Price: $375 Current demand: 450 tanksNew demand 425 tanks What is the coefficient of elasticity for Sam’s business? Here is the formula for calculating elasticity: Ed = {(Q1-Q2) / [1/2 (Q1+Q2)] } / {(P1-P2) / [1/2 (P1 + P2)]}Sanford Inc. currently competes in a duopoly. The market price is $10, and Sanford's annual profit is $10 million. If Sanford were the only firm in the market, it could charge the monopoly price of $25 per unit and earn $35 million annually for an indefinite period of time. By charging $5 per unit for one year, Sanford could drive its rival out of the market and maintain a monopoly position indefinitely. However, this strategy will result in a $20 million loss since its marginal cost is $8 per unit. a. What pricing strategy is the manager considering?b. Ignoring legal considerations, is this pricing strategy profitable? Assume the interestYou are the manager of Taurus Technologies, and your sole competitor is Spyder Technologies. The twofirms’ products are viewed as identical by most consumers. The relevant cost functions are C(Qi) = 2Qi,and the inverse demand curve fort his unique product is given by P = 110 − 2Q. Currently, you andyour rival simultaneously (but independently) make production decisions, and the price you fetch for theproduct depends on the total amount produced by each firm. However, by making an unrecoverable fixedinvestment of $60, Taurus Technologies can bring its product to market before Spyder finalizes productionplans. Assume Taurus Technologies is the leader in this scenario.(a) What are your profits if you do not make the investment?(b) What are your profits is you do make the investment?(c) Should you invest the $60?
- A market consists of groups of buyers and sellers of a good or service. Market equilibrium represents the price at which the quantity of goods supplied is balanced with the number of goods consumers are willing and able to buy. Consider the market for coffee: Assume first that there is a heatwave that damages a large portion of coffee beans. Describe how this would affect equilibrium in the market for coffee. Specifically, does demand or supply shift, in which direction, and what is the effect on equilibrium price and quantity? Next, assume there is a new study that finds enormous health benefits to coffee consumption. Again, describe how this would affect equilibrium in the market for coffee. Specifically, does demand or supply shift, in which direction, and what is the effect on equilibrium price and quantity? Now, extend your analysis to what might happen if both of these events (weather which damages coffee beans and positive news on the health benefits of coffee) happen…Given that a monopoly’s marginal cost is not zero, EXPLAIN why the demand must be elastic at the profitmaximizing quantity.Assume that Trinbago is a small country that produces wine and motor vehicles, where motorvehicles are capital intensive. Trinbago is also capital intensive, and the standard Heckscher -Ohlin(H-O) assumptions hold. The other country in the model is Vincyland. 1. In autarky, according to Ohlin, how does Trinbago’s relative price of labour compare toVincyland’s? 2. Show the necessary graphs to fully explain all requested effects. label graphs andgive brief explanations.
- how is the price of Fertilizer determined? we know that the price of a good is formed from the interaction of supply and demand. Producers will not sell a good below the cost of production. Demand changes the price due to competition; more demand drives the price up, less demand brings the price down. when you discuss how the price is determined: Taxes: is the good taxed? (e.g. cigarettes have a high tax) Costs of production: (resources, labor, etc.) Transportation Competition: is the good in high demand? Give a summary of the factors that go into the price of the good. (asked before but want better answer)Suppose that the demand for a monopoly’s product decreases so that its profit-maximizing price is below average variable cost. How much output should this monopolist firm supply? Draw the graph.The Hesper Corporation is a leading manufacturer of high-quality upholstered sofas. Current plans call for an increase of $6000,000 in the advertising budget. If the firm sells its sofas for an average price of $850 and the unit variable costs are $550, then what dollar sales increase will be necessary to cover the additional advertising?
- Consider a two-tier supply chain with one manufacturer and one retailer whointeract in a single selling season. The manufacturer sells a product to the retailer, who in turn sells in the market. Demand E is uncertain with cumulative distribution function F (·)and probability density function f (·). Since the production lead time is much longer thanthe selling season, the retailer must place a single order before demand is realized and cannotreplenish her inventory during the season. The retailer sells the product at an exogenousand fixed retail price r. The manufacturer produces the product at a unit cost of c. Themanufacturer uses a linear sales rebate contract and determines the following contract terms:For each unit ordered, he charges the retailer a wholesale price w, and for each unit sold, hepays the retailer a rebate s. Assume that the product has zero salvage value at the end ofthe season, and the inventory holding cost during the season is…What is the key difference between variable and fixed costs? A. Variable costs remain the same regardless how many units of a product or sold, whereas fixed costs will increase as more units are sold. B. Fixed costs are paid in full using cash, while variable costs are paid in the future using credit. C. Fixed costs remain the same regardless how many units of a product or sold, whereas variable costs will increase as more units are sold. D. Variable costs will be incurred during the current term, and fixed costs are paid in a future period.Company Y acquired The Seoul Post in February 2021 for $315 million. Suppose the yearly margin per Seoul Post reader is $1 per year (coming from advertising), and the yearly retention rate is 70%, and assume a yearly discount rate of 10%. (b) How many new readers should the Seoul Post acquire to close that gap, assuming an acquisition cost of $0.50 per reader? That is, how many new readers should it acquire to raise the CLV of its readers to $315 million, where the CLV of new readers is reduced by the acquisition cost?Company Y recently acquired the startup Gravity for $83 million, in order to improve their customization of content online. Gravity will optimize the articles recommended to the readers of the Seoul Post on the site, and the display ads served to these readers. Such analytics tool has the potential to improve both retention rate (more relevant content means more loyal readers) and advertising revenue (more time spent on the site and more relevant ads both mean more…