Which graph in the figure best represents a good that is an inferior good at some income levels, and a normal good at other income levels? O A. Graph A ОВ. Graph B Oc. Graph C OD. Graph D
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A: "Since you have asked multiple questions, we will solve the first one for you. If you want any…
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A: Given that Cheese is a normal good. In the case of normal good the law of demand hold.
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A: Solving first three parts as per guidelines. Total Utility refers to the total satisfaction derived…
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A: Answer -
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A: Cross-price elasticity of demand = % change in the quantity demand/ % change in the price
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A: Marginal Utility is the value of utility that consumers get from consuming an additional unit of the…
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A: IC’s are always downward sloping and convex towards the origin.
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A: Inferior goods are goods whose demand is inversely related to income.For example : frozen food,…
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A: Utility is maximized when (MUB/PB) = (MUD/PD). In this case, MUB/PB = 5/2 = 2.5 MUD/PD = 13/10 = 1.3…
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A: Paul can afford 5 twinkies worth $2.85 each. It costs him 2.85*5=14.25. The rest of his income is…
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A: The above problem is based on two types of goods: Normal Goods Inferior Goods Normal goods are…
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- There is a Jexaco gas station right across the street from a Jalero station in Pennsylvania It is safe to assume that they compete locally for the same consumers and can observe the prices posted on each other's marquees. Demand for gasoline in this local market is Q = 80 − 6P, and both stations obtain gasoline from their supplier at $2.20 per gallon. On the day that both franchises opened for business, each owner was observed changing the price of gas advertised on its marquee more than 10 times; the owner of Jexaco lowered its price to slightly undercut Jalero's price, and the owner of Jalero lowered its price to beat Jexaco's. Since then, prices appear to have stabilized. Which of the oligopoly models is most suitable for explaining this behavior by these firms? Under current conditions, how many gallons of gasoline are sold in the market, and at what price? Would your answer differ if Jalero had service attendants available to fill consumers' tanks but Jexaco was only a…Joe and Rebecca are small-town ready-mix concrete duopolists. The market demand function is Qd = 10,000 – 100P, where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $25 per cubic yard. Suppose that Joe and Rebecca compete in quantities and competition in this market is described by Cournot model. What are Joe and Rebecca’s Nash equilibrium outputs? What is the resulting price? What do they each earn as profit? How does the price compare to the marginal cost? Joe and Rebecca are small-town ready-mix concrete duopolists. The market demand function is Qd = 10,000 – 100P, where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $25 per cubic yard. Suppose that Joe and Rebecca compete in quantities and competition in this market is described by Cournot model. What are Joe and Rebecca’s Nash equilibrium outputs? What is the resulting price? What do they each…Two firms produce the samecommodity, both with zero cost. The demand for this commodity is D(P) = 100−P.The two firms can each produce at most 50 units. They compete on price andrationing is efficient: if pi < pj then the demand that j faces is Dj(p) = D(pj) − qi,where qi is the quantity supplied by firm i. That is, the lower price firm gets to sellfirst. Is the price list p = (p1, p2) = (0, 0) a Nash equilibrium? Prove your assertion.
- Two firms produce a homogeneous good and compete in price. Prices can only take integer values. The demand curve is Q = 6 p, where p denotes the lower of the two prices. The lower - priced firm meets all the market demand. If the two firms post the same price p, each one gets half the market demand at that price, i. e., each gets (6p)/2. Production cost is zero.a) Show that the best response to your rival posting a price of 6 is to post the monopoly price of 3. What is the best response against a rival's price of 4? of 5?Two firms compete in selling identical widgets. They choose their output levels Q1 and Q2 simultaneously and face the demand curve P = 30 - Q where Q = Q1 + Q2. Until recently, both firms had zero marginal costs. Recent environmental regulations have increased Firm 2’s marginal cost to $15. Firm 1’s marginal cost remains constant at zero. TRUE-FALSE: Is the following statement true of false? ”As a result, the market price will rise to the monopoly level.” Solve for the Cournot equilibrium and write a convincing explanation of your answer.Suppose that two clothing manufacturers, Lands’ End and L.L. Bean, are deciding what price to charge for very similar field coats. The cost of producing these coats is $100. The coats are very close substitutes, so customers flock to the seller that offers the lowest price. If both firms offer identical prices, each receives half the customers. For simplicity, assume that the two firms have the choice of pricing at prices of $103, $102, or $101. The profit each firm would earn at various prices (Lands’ Ends Profit, LL Bean’s Profit) is attached in the payoff matrix below: a.) What is the Nash equilibrium and expected profits to LL Bean and Lands’ End of this game? b.) Suppose this is a mixed strategy game in which LL Bean has a 25% percent chance of choosing a priceof $101, a 25% chance of choosing price of $102, and a 50% chance of choosing $103, while Lands End has a1/3 chance of choosing each strategy. What’s the expected payoff to LL Bean? c.) Suppose that in hopes of raising…
- 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…Three oligopolistic firms ("1", "2" and "3") conduct quantity competition in a certain market. The interactions between them take place as follows: firm 1 defines its production quantity, which is immediately observed by firms 2 and 3; then, firm 2 makes its decision on how much it will produce, and only after observing the decisions of firms 1 and 2 does firm 3 finally make its respective choice. Furthermore, the total costs of firms 1, 2 and 3 correspond respectively to c₁(q₁) = 10q₁, c₂(q₂) = 8q₂ and c₃(q₃) = 2q₃, and the firms face a (inverse) demand given by p(Q) = 110 - Q (where Q = q₁ + q₂ + q₃). Based on this information, determine what will be the total amount produced by the firms in the (single) ENPS for that game. (Note: the correct answer is an integer.)There is a duopoly in the market, with Firm A and Firm B considering whether to compete against each other or cooperate. If Firm A and Firm B both agree to cooperate, they will each earn $1,010$1,010 in profits. If one of them decides to compete at the expense of the other, it will earn $1,800$1,800 in profits, while the other will earn three times less.Calculate the difference between the total profits for both firms when they cooperate and when one takes advantage of the other. Write the exact answer. Do not round.
- 2. Four firms (A, B, C, and D) play a pricing game (i.e. Bertrand). Each firm (i) may choose any price Pi from 0 to ¥, with the goal of maximizing its own profit. Firms A and B have MC = 10, while firms C and D have MC = 20. The firms serve a market with the demand curve Q = 100 – P. All firms produce exactly the same product, so consumers purchase only from the firm with the lowest price. If multiple firms have the same low price, consumers divide their quantities evenly among the low-priced firms. Assume the firms choose price simultaneously. a. There are many equilibria in this simultaneous-move pricing game. Provide one equilibrium combination of prices, and argue that no firm has a unilateral incentive to deviate from these prices. Now assume firm A chooses price first. Firm B observes this choice and then chooses its own price second. Firm C chooses price third, and firm D chooses price last. b. Again, there are many equilibria in this sequential-move pricing game.…Suppose that two Japanese companies, Hitachi and Toshiba, are the sole producers (i.e., duopolists) of a microprocessor chip used in a number of different brands of personal computers. Assume that total demand for the chips is fixed and that each firm charges the same price for the chips. Each firm’s market share and profits are a function of the magnitude of the promotional campaign used to promote its version of the chip. Also assume that only two strategies are available to each firm: a limited promotional campaign (budget) and an extensive promotional campaign (budget). If the two firms engage in a limited promotional campaign, each firm will earn a quarterly profit of $14 million. If the two firms undertake an extensive promotional campaign, each firm will earn a quarterly profit of $11 million. With this strategy combination, market share and total sales will be the same as for a limited promotional campaign, but promotional costs will be higher and hence profits will be lower.…Consider two firms that produce the same good and competesetting quantities. The firms face a linear demand curve given by P(Q) =1 − Q, where the Q is the total quantity offered by the firms. The costfunction for each of the firms is c(qi) = cqi, where 0 < c < 1 and qiis the quantity offered by the firm i = 1, 2. Find the Nash equilibriumoutput choices of the firms, as well as the total output and the price, andcalculate the output and the welfare loss compared to the competitiveoutcome. How would the answer change if the firms compete settingprices? What can we conclude about the relationship between competitionand the number of firms?