EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 19, Problem 2P
Sub Part (a):
To determine
Herfindahl-Hirschman index.
Sub Part (b):
To determine
Change in the Herfindahl index.
Sub part (c):
To determine
Change in market share and the Herfindahl index.
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Question 1.Assume there are only two art auction companies who account for 100% of all the sales of 19thCentury impressionist master work paintings in the world. Assume that each company buys thiskind of painting and then resells the paintings at monthly auctions. Ignoring the question of anylaws that might apply, describe what economic arrangement would maximize the twocompanies’ total profits? Show with supply and demand curves what profit they would makefrom this arrangement and what societal welfare loss, if any, results from it.
Chapter 19 Solutions
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- Question 2 [JP.14.3.19] Consider a duopoly where the market demand is described by the equation: P = 150- Q. The marginal cost for each firm is $60. lo.] If the firms compete simultaneously with output, what is each firm's profit-maximizing output, the market quantity, and the price each firm charges? (b.) What is the economic profit eamed by each firm (from question [a]} [c.) If Firm 1 is a leader in output, what is each firm's profit-maximizing output, the market quantity, and the price each firm charges? [d.] What is the economic profit earned by each firm (from question [c])?arrow_forward1. The table below represents the demand for Widgets, Inc., which has a monopoly in the sale of widgets. Calculate total revenue and marginal revenue for the levels of output given. Draw the demand curve and the marginal revenue curve in a same graph. Quantity 0 1 2 3 4 LO 5 Price $25 21 17 13 9 LO 5arrow_forwardSuppose there are two firms in an industry and the inverse demand function for the industry is: P = 45 - 20 Assume that the MC functions for the two firms are: MC1 = 15 MC2 = 12 What is the price under Courbet model? O 15 O 24 O 30 O 36 O 21arrow_forward
- Question 17 3아- MC ATC 26 27 26 25 24 AVC 20 MR 100 190 260 300 400 What is the optimal output and price for the prafit maximizing, nondiscriminating monopolist in the exhibit above? O 190 and $30 O 190 and $26 O 190 and $25 O 260 and $28 O 300 and $27 D Question 18 $/9 30- MC ATC 28 27 AVC 26 25 24 D. 2아 MR 100 190 260 300 400 Total cost for this nondiscriminating monopolist at its profit-maximizing output level in the exhibit above is O $7280 O $4750 $5700 None of the choices are correct O $4940 D Question 19 Why is collusian to raise prices highly unlikely among firms in perfectly competitive industries? O All the firms in competitive industries love their consumers too much to ever collude against them O There is only one firm in perfectly competitive industries, so whom would they collude with? • There are too many firms in perfectly competitive industries. O The products are too differentiated for collusion in perfectly competitive industries 3 This is a trick question because…arrow_forwardCarrot Computers and its competitors purchase touch screens for their tablet computers from several suppliers. The slx makers of touch screens have market shares of, respectively, 19 percent, 18 percent, 12 percent, 18 percent, 21 percent, and 12 percent. Instructions: Enter your answers as a whole number. a. What is the Herfindahl index for the touch screen manufacturing industry? ok b. By how much would a proposed merger between the two smallest touch screen makers increase the Herfindahl index? rint Is the government likely to challenge that proposed merger? brences (Click to select) : c. If Carrot Computers horizontally merges with its competitor Blueberry Handhelds, by how much would the Herfindahl index change for the touch screen industry?arrow_forwardQuestion 2 AnimoSpace Support ? Given the perfect competitor firm's supply curve below, what is the shutdown price? P(cost) MC AC 80 AVE 70 60 50 40 30 20 (10,10) 10 10 20 30 40 50 60 70 80 90 100 110 12 Qty Break-even quantity: Shutdown price: O 50 O 70 O 35 IS O 80 O 5 a Question 3 Which of these market structures is not correctly described? Monopolistic Nliaonoly Mononolhe o searcharrow_forward
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