Granite Tops for You uses each. What is the company's fixed cost? B) $500 A) $250,000 Which of the following is used to measure market structure and performance? B) Four-firm concentration ratio index) A) Eight-firm concentration ratio C) HHI (Herfindahl-Hirschman C) $75,000 D) All of the answers are correct. C)03 An industry is comprised of 40 firms, each with an equal market share. What is the four-firm concentration ratio of this industry? B) 0.1 A) 02 D) 0.4 D) $5,000 y competitive market, then it will most likely
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- 2. You are the Southeastern Michigan regional manager at Coca-Cola, responsible forproduction and pricing in the Metro Detroit area. Your primary competitor is Pepsi. The marketresearch team at Coca-Cola is thinking about launching a new product, Orange Vanilla Coke, toboost the brand. The cost function to produce a 12-pack of 12 fl. oz. cans of Orange VanillaCoke is C(qcoke) = 0.25qcoke and the market research team has estimated inverse market demandfor a 12-pack of this new “pop” in Southeastern Michigan to be P = 10.25 – 0.00025Q. a. Assuming Pepsi decides not to produce a similar product, allowing Coca-Cola to maintainmonopoly power in the market for orange vanilla cola, what price and quantity will youchoose to maximize profit? How much profit does Coca-Cola earn?b. What price and quantity you would choose to maximize profit if Pepsi spies discover yourproduct before launch, allowing Pepsi to produce and launch an identical product at the sametime. For your answer, assume the cost…A major software developer has estimated the demand for its new personal finance software package to be Q=1,000,000P-2 while the total cost of the package is C = 10,000+ 25Q. If this firm wishes to maximize profit, what percentage markup should it place on this product where percentage markup is defined as 100*(sale price - marginal cost)/marginal cost? 4. a. b. C. d. e. ANS: 90% 100% 20% 40% 250%KidzPoses Inc., a profit-maximizing business, is the only photography business in town that specializes in portraits of small children. James, who owns and runs KidzPoses, expects to encounter an average of eight customers per day, each with a reservation price (shown in the following table). Assume James has no fixed costs, and his cost of producing each portrait is $12. Customer Reservation Price ($ per photo) 1 50 2 46 3 42 4 38 5 34 6 30 7…
- Explain what is meant by a perfect competitor has no market power as applied to power system economics.Tim Marlow, the owner of The Clock Works, wanted to know how many clocks he must sell in order to cover his fixed cost at a given price. Tim knew that he had a fixed cost of $20,000 for equipment, taxes, and a bank loan. He also had a unit variable cost of $20 per clock for labor, materials, and promotional costs. If the price Tim charges for each of his clocks is $40, what is his break-even point quantity?(Q7: see reference of Q4 for marginal value method to solving profit max problem) 7. a. Use calculus to find the profit maximizing level of (a) output, (b) price, and (c) profit for a two-product firm facing the following demand and cost functions (hint: marginal method): P₁ = 475-601 P2 = 450-802 TC(Q1Q2)=40+5Q1Q2 +30 +700 where quantities are expressed on a weekly basis. b. Check your answer with excel solver. (Q8: refer to Q3 and Q5 for constrained optimization problem, also see Q4 of PS 5-B) 8. Suppose the firm in problem 7 has a maximum joint capacity of 40 units per week (Q1+Q2<=40). a. Use Solver to find the profit maximizing level of output, price, and profit given this production constraint. b. Use the Lagrange multiplier (sensitivity report) to estimate the effect of expanding capacity by one more unit per week.
- 2) A doodad retailer is attempting to market its new product lineup as “the doodad that does it all” and now with “70% less ‘dad’ & 100% more ‘dood’”. If successful, the retailer will carve out a small portion of the market. The firm’s demand & cost structures would be: P = 220 – 3qi & TC = 350 + 10qi + 3qi2 . Answer the following questions about the firm. What is the firm’s optimal price & quantity strategy. What is the firm’s breakeven quantity(ies) (show your work). What is the expected long-run outcome for this firm (no math required here). What can this firm do to protect itself from potential long-run market adjustments. EC: Is this firm productively and allocatively efficient in the long-run (no math needed). I need help with number 2.Looking at the Table, Profit, Cost and Revenue Functions, Quant is the quantity of output, C(Q) is the Total Cost of production for corresponding quantities of output, R(Q) is the corresponding Total Revenue at each level of output Q, if all output is sold and PRF(Q) is the Total Profit for each corresponding output level. PRF(Q) is calculated as R(Q)-C(Q). Using this information, does the company make its highest profit where R(Q) is highest? a. No, because the highest possible revenue may be at an output level where the cost of output may exceed the revenue generated at that output level. In this problem, the highest profit is at output level 15 Ob. Yes, because there is no way that cost can exceed revenue when revenue is maximized. Cc. No, because the highest possible revenue may be at an output level where the cost of output may exceed the revenue generated at that output level. In this problem, the highest profit is at output level 10 or 12 or in between. Od. Yes, because the…4. A vertically integrated automobile company has an upstream engine division and a downstream assembly division. The demand for the company's cars is given by Q = 20-P. Each car requires one engine. The downstream division's total cost of assembling cars is TCD(Q) = 4Q. The upstream division's total cost of producing engines is TCv (Q) = Q². (a) Suppose that there is no outside market for engines. What is the price and quantity of cars produced by the company? (b) Suppose that there is no outside market for engines. What should be the transfer price for engines? [Hint: the transfer price of an engine should equal the marginal cost of engine production at the optimal quantity.] (c) Suppose that there is a competitive outside market in which the price of an engine is 12. What is the price and quantity of cars produced by the company? (d) Suppose that there is a competitive outside market in which the price of an engine is 12. What is the quantity of engines that the company buys or…
- 1. The Bergen Company and the Gutenberg Company are the only two firms that produce and sell a particular kind of machinery. The demand curve for their product is P = 580 – 3Q where P is the price (in dollars) of the product, and Q is the total amount demanded. The total cost function of the Bergen Company is TC,=410QB В where TC, is its total cost (in dollars) and QR is its output. The total cost function of the Gutenberg Company is TC, = 460QG where TC, is its total cost (in dollars) and Q, is its output. • If these two firms collude and they want to maximize their combined profit, how much will the Bergen Company produce? b. How much will the Gutenberg Company produce? c. Will the Gutenberg Company agree to such an arrangement? Why or why not?You've researched and found that most firms in the market currently experience costs such that TC = 1,325 + 3800 - 6.7502 + 0.0703. Determine whether or not you should enter this market. Select one: Oa. Plugging the market equilibrium quantity into the firm total cost function results in huge costs for my company, so I should not enter until P > MC. b. Using the P= = MC rule, the equilibrium price is below ATC at the optimal quantity, so entering would result in a loss. I should not enter. O c. The optimal Q is set where AVC and ATC intersect which occurs far above the equilibrium price, so entering would result in profits and thus I should enter. O d. The total revenue at the equilibrium P is greater than the total costs, so it would be profitable to enter.Refer to the above diagram. This profit maximizing firm will: A) An economic profit of AJHB B) An economic loss of BHGC C) An economic profit of AJGC D) an economic profit of AJEO