MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Chapter 9, Problem 17PAA
To determine
If the legislation would be supported or opposed.
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You are the manager of a firm that competes against four other firms by bidding for government contracts. While you believe your
product is better than the competition, the government purchasing agent views the products as identical and purchases from the firm
offering the best price. Total government demand is Q = 1900 -10P and all five firms produce at a constant marginal cost of $120. For
security reasons, the government has imposed restrictions that permit a maximum of five firms to compete in this market; thus entry
by new firms is prohibited. A member of Congress is concerned because no restrictions have been placed on the price that the
government pays for this product. In response, she has proposed legislation that would award each existing firm 20 percent of a
contract for 500 units at a contracted price of $140 per unit.
If this legislation is passed, by how much should you expect your profits to change?
Instructions: If you expect profits to fall, enter a negative (-)…
You are the manager of a firm that competes against four other firms by bidding for government contracts. While you believe your
product is better than the competition, the government purchasing agent views the products as identical and purchases from the firm
offering the best price. Total government demand is Q= 2000 -5Pand all five firms produce at a constant marginal cost of $130. For
security reasons, the government has imposed restrictions that permit a maximum of five firms to compete in this market; thus entry by
new firms is prohibited. A member of Congress is concerned because no restrictions have been placed on the price that the
government pays for this product. In response, she has proposed legislation that would award each existing firm 20 percent of a
contract for 1200 units at a contracted price of $160 per unit.
If this legislation is passed, by how much should you expect your profits to change?
Instruction: If you expect profits to fall, enter a negative (-) number.
Colombia and Brazil are two of the major
suppliers of coffee globally, each accounting for
the production of roughly 30 percent of all coffee
consumed. Suppose that Colombia and Brazil
both have the same marginal cost, MCC=20 +
120qc and MCB=20 + 120qB. There are also many
smaller coffee producing nations that operate
competitively. Suppose that after substracting
supply of these smaller nations from global
demand, the remaining demand is P= 720-20Q
which implies that MR=720-4OQ :Determine the
optimal quantity of coffee that Columbia and
Brazil should each produce and the global market
price they should establish if they collude (you can
think of the price being for a 100 kilogram bag of
raw coffee beans).
Chapter 9 Solutions
MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
Ch. 9 - Prob. 1CACQCh. 9 - Prob. 2CACQCh. 9 - Prob. 3CACQCh. 9 - Prob. 4CACQCh. 9 - Prob. 5CACQCh. 9 - Prob. 6CACQCh. 9 - Prob. 7CACQCh. 9 - Prob. 8CACQCh. 9 - Prob. 9CACQCh. 9 - Prob. 10CACQ
Ch. 9 - Prob. 11PAACh. 9 - Prob. 12PAACh. 9 - Prob. 13PAACh. 9 - Prob. 14PAACh. 9 - The opening statement on the website of the...Ch. 9 - Prob. 16PAACh. 9 - Prob. 17PAACh. 9 - Prob. 18PAACh. 9 - Prob. 19PAACh. 9 - Prob. 20PAACh. 9 - Prob. 21PAACh. 9 - Prob. 22PAACh. 9 - Prob. 23PAACh. 9 - Prob. 24PAA
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