Which of the following is NOT a strategy used by a company to “lock-in" customers to ensure demand for its product? O Generating positive network effects. O Pressuring the government to require a license for entry into the market Building goodwill and loyalty among customers. Increasing switching costs.
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- Assuming you are the managing director of a firm that produces three goods: A, Band C. The price elasticity of demand for A is 1.2, for B it is 1.00 and for C it is 0.75.It is known that he firm is experiencing serious cash flow problems and you have toincrease total revenue as soon as possible. If you were in a position to set the pricesfor these goods, what would be your pricing strategy for each productDuck Donuts sells plain and premium donuts. Premium donuts are plain donuts with special toppings. Demand for plain (PL) donuts is: PPL = 3 - 0.2QPL and Demand for premium (PR) donuts is: PPR = 4.4 - 0.4QPR The marginal cost for each is: MCPL = 0.20 MCPR = 0.40 Which of the following statements is true? a.Plain donuts generate more Total Revenue than premium donuts b.More premium donuts will sell than plain donuts c.Only premium donuts should be sold d.Only plain donuts should be sold e.Premium donuts generate more Total Profit than plain donutsEconomics: Industrial Economics Question: A duopoly exists in the market for lumber in a town. It costs the first company, Big Cutters, $16 per cord of wood while it costs the second company, Pine Stackers, $10 per cord of wood. The local market demand curve for wood is Q-31,000-100P. Assume each has the capacity to serve the entire market and that they can only price in whole dollar amounts (i.e.$30, not $29.99). Assume initially that Cutters and Stackers decide to collude and split the market. How many cords of wood will they sell? Choices: A. 12,000 B. 9,000 C. 15,000 D. 20,000 2. What will be the price they charge? Choices: A. 190 B. 210 C. 110 D. 160 3. How much will Big Cutters produce? Choices: A. 9,000 B. 4,500 C. 0 D. 15,000 Now assume that collusion is not possible. 4. What is the Nash Equilibrium quantity that Pine Stackers Choices: A. 0 B. 15,300 C. 14,700 D. 29,500 5. What is the Nash Equilibrium price? Choices: A. 15 B. 112 C. 11 D. 157 Thank you for your…
- a) A Dutch Brewing company produces Heineken beer, assume further that the marginal cost of producing a six pack of Heineken Beer is $6. Dutch Brewing company sells Heineken in two different Markets namely Africa and Europe whose inverse demand functions are ?? = 24 − ??and ?? = 12 − 0.5?? respectively.Requireda) Calculate the profit maximising Price-Quantity combinations in these two markets Africa and Europe.b) With this Pricing strategy calculate the profit. c) If competitive output (P=MC=6) for Africa is 18 and Europe is 12, Compute the deadweight losses in the two markets. d) Clearly illustrates that the third degree price discrimination is welfare improving over a single price policy. e) Suppose these markets were no longer separated. How would you construct the market demand in this situation? Would the monopolist’s profit-maximizing single price still be 15?Profit equals revenue minus cost. We have looked at costs. We now turn to revenue. Let us assume that firm S is a price In other words, it faces a (i) downward-sloping / horizontal (ii) demand curve / supply curve (Delete as appropriate.) Let us assume that it faces a market price of £2 per unit for its product. What is its total revenue from selling: (i) 5 units? ................................ (ii) 8 units? ................................ (c) What shape is its total revenue curve? ....................................................................................... (d) What will be its marginal revenue from selling: (i) the fifth unit? ................................ (ii) the eighth unit?…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.…
- Solve only c and d 2. There are 2 groups with different demand in a market, as follows: ?!=40−?1 and ?"=100−2?2 a. Give the inverse demand curves and marginal revenue in each of these groups. b. If marginal cost is flat at $10, calculate the profit-maximizing quantities and prices associated with this market place. Are the prices for each group different? Comment on the outcomes. c. Calculate the producer surplus associated with the outcomes generated in part b. d. Now calculate the equilibrium price and quantity if the firm charges one price across all consumers. What is the producer surplus associated with this outcome and how does it differ to that calculated in part c?Question #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?A publisher faces the following demand schedule for the next novel from one of its popular authors:Price Quantity Demanded100 090 100,00080 200,00070 300,00060 400,00050 500,00040 600,000 530 700,00020 800,00010 900,0000 1,000,000The author is paid $2 million to write the book, and the marginal cost of publishing the book is a constant $30 per book.d. In your graph, shade in the deadweight loss. Explain in words what this means. e. If the author was paid $3 million instead of $2 million to write the book, how would this affectthe publisher’s decision regarding the price to charge? Explain. f. Suppose the publisher was not profit-maximizing but was concerned with maximizing economicefficiency. What price would it charge for the book? How much profit would it make at thisprice? (
- Which one will lead to increase in demand curve of french fries O a. A publicised news clip that French fries are full of cholesterol O b. A deep discount by banana fries offering buy one get one free O C. A news that potato prices will increase in future Od. Huge advertisement budget outlays by its competitorsYummy Yummy Popcorn, Inc. sells bags of flavored 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. Please do fast ASAP fast pleaseSubway v/s Big Mac When subway launched it started taking market share of McDonalds because its food is regarded as fresh, healthy, on spot and made as per customer’s taste and preference. In 2003, McDonalds then replaced its traditional question “will you have fries with that” to “will you have an apple with that” as a part of its major reorientation of the product to match its customer’s preferences. a) Explain why McDonalds has made this change? Refer to the conditions of demand of Big Mac? b) What combination of two graphs (McDonalds and Subway) would you use to illustrate the above fast food situation? (movement along the curve or shift) c) What factors were responsible for the changes in the fast food market? d) What would happen if they didn’t make any such changes? e) According to you, how was the impact of this change in strategy of McDonalds?