Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Chapter 28, Problem 7E
To determine
To explain:
Whether the market is very competitive or non-competitive if the Herfindahl-Hirschman index for domestic production of televisions is 5,000.
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What Factors Influence Perfect Competition for Environmental Economic Market Structures.
Apparel manufacturer Nike produces high-end and low-end versions of their running shirts. They estimate that the demands for their products are given by:
High-end shirts: P = 130 - 2QH , andLow-end shirts: P = 80 - QL, where Q is measured in 1000 shirts, "H" denotes High-end and "L" denotes Low-end
Both types of shirts are produced on the same production line in the same facility, so the marginal cost of producing and selling both types of shirts is constant at $30.
Supposing that (i) the two demands are independent and (ii) Nike can produce and market the shirts such that the high- and low-end markets are successfully segmented, what are the profit-maximizing prices Nike would charge for each version?Answer Options:a) by the midpoint rule, PH = $65 and Pl = $40b) PH = $80 and PL = $55c) Nike will set price equal to marginal cost for both versionsd) PH = $130 and PL = $80
A vertically integrated firm has 2 divisions; upstream and downstream divisions. The upstream division produces chemical Y, whose average total cost is ATCU = 10 + 2QU, where QUis the quantity of Y. The downstream division has its own average total cost of ATC = 20 + 3Q where Q is the quantity of the firm’s final product. There is no external market. What is the transfer price (PU)?
Question 55 options:
PU = 10 + 2QU.
PU = 10 + 4QU.
PU = 20 + 3QU.
PU = 20 + 6QU.
None of the above.
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