Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134643175
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 13, Problem 12E
To determine
Differences in success.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Economic agents for example consumers or firms often do things
Economic agents (for example, consumers or firms) often do things that at first glance seem to be inconsistent with their self-interest. People tip at restaurants and when they are on vacation even if they have no intention to return to the same place. Firms, sometimes, install costly pollution abatement equipment voluntarily. How can these deviations from Nash predictions be explained?
Economic agents for example consumers or firms often do things
You work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: penguin patties, raskels, and cannies. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods.
Run-of-the-Mills provides your marketing firm with the following data: When the price of penguin patties decreases by 20%, the quantity of raskels sold decreases by 22% and the quantity of cannies sold increases by 7%. Your job is to use the cross-price elasticity between penguin patties and the other goods to determine which goods your marketing firm should advertise together.
Complete the first column of the following table by computing the cross-price…
Suppose research at Panasonic reveals that prospective buyers are anxious about buying high definition television sets. What strategies might you recommend to the company to reduce consumer anxiety
Chapter 13 Solutions
Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (9th Edition) (Pearson Series in Economics)
Knowledge Booster
Similar questions
- In a sealed-bid, second-price auction with complete information, the winner is the bidder who submits the second-highest price, but pays the price submitted by the highest bidder. Do you agree? Explain.arrow_forwardSophia is a contestant on a game show and has selected the prize that lies behind door number 3.The show’s host tells her that there is a 50% chance that there is a $15,000 diamond ring behindthe door and a 50% chance that there is a goat behind the door (which is worth nothing to Sophia,who is allergic to goats). Before the door is opened, someone in the audience shouts, “I will giveyou the option of selling me what is behind the door for $8,000 if you will pay me $4,500 for thisoption.” [Assume that the game show allows this offer.]a. If Sophia cares only about the expected dollar values of various outcomes, will she buythis option?b. Explain why Sophia’s degree of risk aversion might affect her willingness to buy thisoptionarrow_forwardRoyal Dutch Shell has been doing business in Nigeria since the 1920s, and has announced new plans to develop oil and gas projects there. However, over the years Shell has confronted a series of episodes involving country risk. Shell’s operations are centred in Nigeria’s Ogoni region, where the local citizens have protested Shell’s drilling and refining activities, which are said to spoil the natural environment and reduce the amount of available farmland. Protestors also accuse Shell of extracting wealth from the region without adequately compensating local residents. Ogonis sabotaged Shell’s operations to such an extent that the firm suspended parts of its Nigerian operations. Shell also came under pressure to divest its Nigerian operations and to pay reparations to the locals. What proactive steps can Shell take to anticipate future country risk? What should Shell do to deal more effectively with country risk?arrow_forward
- One of the critical moments early on in the The Lord of the Rings trilogy is the meeting in Rivendell to decide who should take the One Ring to Mordor. Gimli the Dwarf won’t hear of an Elf doing it, whereas Legolas (who is an Elf) feels similarly about Gimli. Boromir (who is a Man) is opposed to either of them taking charge of the Ring. And then there is Frodo the Hobbit, who has the weakest desire to take the Ring but knows that someone must throw it into the fires of Mordor. In modeling this scenario as a game, assume there are four players: Boromir, Frodo, Gimli, and Legolas. (There were more, of course, including Aragorn and Elrond, but let’s keep it simple.) Each of them has a preference ordering, shown in the following table, as to who should take on the task of carrying the One Ring. Of the three non-Hobbits, each prefers to take on the task himself. Each would prefer that other than themselves and Frodo, no one should take the Ring. As for Frodo, he doesn’t really want to do it…arrow_forwardPart A- You are a manager of an advertising company. The company is running short of funds, so you decide to increase revenue. Should you increase or decrease the price of running ads? Explain. PART B - You own a printing firm. Two of your senior managers provide you with advice. The first manager states that your company is losing money for every unit that is printed. To minimize losses, she advises that you reduce your production levels. The second manager states that if your firm sells some more units, the price will cover your increase in costs. In order to reduce losses, the second manager recommends that you should increase production. Explain which manager is correct and who is offering the correct advice?arrow_forwardJane and Sara are competing orange juice salespersons in Amherst. Their stands are next to each other on a street and consumers regard them as identical. The marginal cost of an orange juice is $1. The demand for orange juice every hour is Q = 20 − P where P is the lowest price between the two salespersons. If their prices are equal they split demand equally. a. If they set prices simultaneously (prices can be any real number), what is the Nash equilibrium price? b. If, against what we have assumed in class, orange juice salespersons have to charge prices in whole dollars ($1, $2, $3, etc), what are the Nash equilibrium prices? c. Assuming whole dollar pricing, if Jane sets her price before Sara, what price would she charge? Answer all 3 partsarrow_forward
- Billy Penny is trying to determine how many units of two types of lawn mowers to produce each day. One of these is the Standard model, while the other is the Deluxe model. The profit per unit on the Standard model is $60, while the profit per unit on the Deluxe model is $40. The Standard model requires 20 minutes of assembly time, while the Deluxe model requires 35 minutes of assembly time. The Standard model requires 10 minutes of inspection time, while the Deluxe model requires 15 minutes of inspection time. The company must fill an order for 6 Deluxe models. There are 450 minutes of assembly time and 180 minutes of inspection time available each day. How many units of each product should be manufactured to maximize profits?arrow_forwardConsider the following game: you and a partner on a school project are asked to evaluate the other, privately rating them either "1 (Good)" or "0 (Bad)". After all the ratings have been done, a bonus pot of $1000 is given to the person with the highest number of points. If there is a tie, the pool is split evenly. Both players only get utility from money. Mark all of the following true statements: A. The best response to your partner rating you as Good is to rate them as Good as well. Your answer B. There is no best response in this game. C. Your partner's best response to you rating them as Bad is to also rate you as C Bad. D. Your best response to any strategy of your partner is to play "Good".arrow_forwardPrice competition between firms, from the firms’ perspective, can be similar to the prisoners’ dilemma. The best outcome for all firms would be for all to charge a high price. However, if the other firms charge a high price, any individual firm has incentives to charge a low price and steal the market. Additionally, if any other firm chooses a low price, each firm should charge a low price too so that it doesn’t get priced out of the market. Explain how price-matching (firms announcing a policy where they match the lowest price a customer can find or will honor a competitor’s coupon) can help firms avoid the Nash equilibrium in which they all charge a low price. Is it misleading for a firm to advertise price-matching as being beneficial to consumers? (Hint: What outcomes of the game are ruled out by the price-matching policy? How does ruling out these outcomes change the game and the decision the firms face?)arrow_forward
- Price competition between firms, from the firms’ perspective, can be similar to the prisoners’ dilemma. The best outcome for all firms would be for all to charge a high price. However, if the other firms charge a high price, any individual firm has incentives to charge a low price and steal the market. Additionally, if any other firm chooses a low price, each firm should charge a low price too so that it doesn’t get priced out of the market. Explain how price-matching (firms announcing a policy where they match the lowest price a customer can find or will honor a competitor’s coupon) can help firms avoid the Nash equilibrium in which they all charge a low price. Is it misleading for a firm to advertise price-matching as being beneficial to consumers? What outcomes of the game are ruled out by the price-matching policy? How does ruling out these outcomes change the game and the decision the firms face?arrow_forwardwhy is a nash equilibrium stablearrow_forwardYou work for a marketing firm that has just landed a contract with Run-of-the-Mills to help them promote three of their products: splishy splashers, raskels, and kipples. All of these products have been on the market for some time, but, to entice better sales, Run-of-the-Mills wants to try a new advertisement that will market two of the products that consumers will likely consume together. As a former economics student, you know that complements are typically consumed together while substitutes can take the place of other goods. Run-of-the-Mills provides your marketing firm with the following data: When the price of splishy splashers decreases by 8%, the quantity of raskels sold increases by 6% and the quantity of kipples sold decreases by 8%. Your job is to use the cross-price elasticity between splishy splashers and the other goods to determine which goods your marketing firm should advertise together. Complete the first column of the following table by computing the cross-price…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning