Economics Questions 1, 2, 3, and 4How to solve and answer these four economics questions? QUESTION 11. If you hire guards from the first company, shown in part a, how many should you hire to maximize profits?ENTER ONLY THE NUMBER ANSWER AND NOTHING ELSE3QUESTION 22. If you use the second firm, the premium firm shown in part b, how many guards should you hire to maximize profits?2QUESTION 33. Which is the better option:A hiring the guards from the first firm as you calculated for question 1B hiring the guards from the premier firm as you calculated for question 2ENTER ONLY A or B. NOTHING ELSE.AQUESTION 4Select the answer that best explains the reason you chose the firm you did. ENTER THE LETTER OF YOUR CHOICE, A B C or DA I picked the one with the greatest Total Revenue Product, because either option will have the same total cost.B I picked the option with the greatest Marginal Revenue ProductC I picked the option with the lowest total costD I picked the option that will allow me to hire the most guards ABC Electronics wants to hire the optimal number of security guards to prevent thefts from its largesuperstore. The following table shows how the number of guards will affect the volume of thefts perweek.# guards01234501Total Revenue Product2$03$1600$2400$3050$3560$3900Total Revenue Product$0MRPa. The "Revenue Product" for a guard is the amount of thefts he prevents, which will result in additionalactual sales revenue for the store. The first 2 guards each cost $700 per week; each additional guardcosts $600 per week. Based on these figures, how many guards should you hire? Fill in the above tableshowing MRP and MC.$2400$3600$1600$800$650b. You consider hiring guards from a premium security firm. These guards are better trained and canprevent more thefts, as shown in the following table:# guards$3975$510$340MRPMC$2400$1200$700$700$375$600$600$600MC$1000$1000$1000Each of these guards cost $1000 per week. How many should you hire?c. Which is the better option--hiring the guards from the first firm as you calculated in part a, or hiringthe guards from the second firm as you calculated in part b? Why?

Marginal Cost is the change in the total cost that arises when the quantity produced changes by one…

1. If you hire guards from the first company, shown in part a, how many should you hire to maximize profits? ENTER ONLY THE NUMBER ANSWER AND NOTHING ELSE 3 QUESTION 2 2. If you use the second firm, the premium firm shown in part b, how many guards should you hire to maximize profits? 2 QUESTION 3 3. Which is the better option: A hiring the guards from the first firm as you calculated for question 1 B hiring the guards from the premier firm as you calculated for question 2 ENTER ONLY A or B. NOTHING ELSE. A QUESTION 4 Select the answer that best explains the reason you chose the firm you did. ENTER THE LETTER OF YOUR CHOICE, A B C or D

1. If you hire guards from the first company, shown in part a, how many should you hire to maximize profits? ENTER ONLY THE NUMBER ANSWER AND NOTHING ELSE 3 QUESTION 2 2. If you use the second firm, the premium firm shown in part b, how many guards should you hire to maximize profits? 2 QUESTION 3 3. Which is the better option: A hiring the guards from the first firm as you calculated for question 1 B hiring the guards from the premier firm as you calculated for question 2 ENTER ONLY A or B. NOTHING ELSE. A QUESTION 4 Select the answer that best explains the reason you chose the firm you did. ENTER THE LETTER OF YOUR CHOICE, A B C or D

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter16: Bargaining

Section: Chapter Questions

Problem 16.1IP

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A. Suppose the inverse demand curve in a market is D(p) =a-bp, where D(p) is the quantity demanded and p is the market price. Firm 1 is the leader and has a cost function c1(y1)=cy1 while firm 2 is the follower with a cost function c2(y2 )=. Firm 1 sets its price to maximise its profit. Firm 1 correctly forecasts that the follower takes the price leader’s chosen price as given (price taker) and chooses output so as to maximise its own profit. Write down the profit function of the follower. Calculate the profit maximising quantity that the follower selects given the leader’s chosen price p (i.e., calculate the follower’s supply curve S(p)). Interpret the solution to the profit maximising problem. B. The leader is facing the residual demand curve R(p)=D(p)-S(p) with D(p) and S(p) as defined in (c) above. Calculate the leader’s residual demand curve using the result in (b). Solve for p as a function of the leader’s output y1, i.e. the inverse demand function facing the leader. Write…
(Use for questions 1 - 3): Two soap producers, the Fortnum Company and the Maison Company, The payoff matrix (profit in millions of dollars) is as follows: can stress either newspapers or magazines in their forthcoming advertising campaigns. Maison Company Stress Newspapers Stress Magazines М, S9M F, S8M M, $8M F, $7M Stress Newspapers Fortnum Company М, S8M F, $9M М, $7M F, $8M Stress Magazines What will be the profit of each firm? a. Maison Newspapers, Fortnum Newspapers: M, $9M and F, $8M D. Maison Newspapers Fortnum Magazines: M, $8M and F, $9M C.Maison Magazines, Fortnum Newspapers: M, $8M and F, $7M M, $7M and F, $8M Maison Magazines, Fortnum Magazines:
(Use for questions 1 - 3): Two soap producers, the Fortnum Company and the Maison Company, can stress either newspapers or magazines in their forthcoming advertising campaigns The payoff matrix (profit in millions of dollars) is as follows: Maison Company Stress Magazines Stress Newspapers М, $8M F, $7M M, $9M F, $8M Stress Newspapers Fortnum Company М, $7M F, $8M М, S8M F, S9M Stress Magazines Is this a game of prisoners' dilemma? Why or why not? Is there a Nash Equilibrium? Why or why not?
If both firms make their decisions at the same time and follow maximin (low-risk) strategies, what will the outcome be? With reference to the definition, explain how the outcome is determined. Suppose both firms try to maximise profits. What will the outcome be if Firm A can commit first?
5. Two firms compete repeatedly in a market of homogeneous goods. Each year, the firms can choose to charge a low or high price. The following payoff table summarizes their payoffs each year. The competition goes on indefinitely. Let 5 E (0, 1) denote the discount factor for both firms. Firm 2 Low High Low 0, 0 5, 0 Firm 1 High 0, 5 4, 4 Consider an n-period punishment trigger strategy s: • Play "High price" in the first stage. • In stage t> 2, if some player deviated to "Low price" in the last period when he is supposed to play "High price", then play "Low price" for n periods and then restart the game. In other words, after playing "Low price" for n periods, play "High price" in the next stage as if it is the first stage of the game. Otherwise, play "High price". Find the necessary and sufficient condition on & for (s, s) to be an SPE. A sufficiently simplified inequality will do.
What is the likelihood that firms would enter the market in the short-run? Use COVID-19 as a market condition to elaborate the likelihood and further elaborate an exit strategy if one exists.
high low high 11, 11 2,18 low 18, 2 10,10 Suppose there are only two firms that sell tablets: Padmania and Capturesque. The following payoff matrix shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its tablets. For example, the lower-left cell shows that if Padmania prices low and Capturesque prices high, Padmania will earn a profit of $18 million, and Capturesque will earn a profit of $2 million. Assume this is a simultaneous game and that Padmania and Capturesque are both profit-maximizing firms. If the firms do not collude, what strategies will they end up choosing? 1. Padmania will choose a low price, and Capturesque will choose a high price. 2. Both Padmania and Capturesque will choose a high price. 3. Padmania will choose a high price, and Capturesque will choose a low price. 4. Both Padmania and Capturesque will choose a low price. True or False: The…
What is the likelihood that firms would enter the market in the short-run? Use COVID-19 as a market condition to explain the likelihood and further explain an exit strategy if one exists.
1. Individual Problems 17-1 Malaysia You're the manager of global opportunities for a U.S. manufacturer that is considering expanding sales into Asia. Your market research has identified the market potential in Malaysia, the Philippines, and Singapore as described in the following table: Success Level Big Mediocre Failure Malaysia Probability 0.7 0.1 0.2 Units 1,300,000 416,000 Philippines Probability 0.2 0.3 0.5 Units 600,000 360,000 Singapore Probability 0.4 0.3 0.3 Units 1,500,000 750,000 The product sells for $20, and each unit has a constant marginal cost of $16. Assume that the (fixed) cost of entering the market (regardless of which market you select) is $500,000.
2. Film producer S costs c=20 to produce one film. B, an online movie distributor, earns v=120 if the movie is distributed. In order for B to distribute the movie, it must be purchased from S. If there is no transaction between S and B, each earns a profit of zero. Find the sum of S's profit and B's profit by the transaction price formed when S and B's bargaining power is 50:50.
An expansion team in a professional sports league is considering locating in one of three cities, A, B, or C. The team estimates that its profit in the three cities, excluding the cost of building a stadium, will be: city A $195 million city B = $200 million city C $210 million The cost of the stadium in any city will be $100 million, but the team expects the winning city to subsidize at least some of this cost. Finally, suppose that each city expects the team to generate the following additional (spillover) economic activity: city A = $75 million city B $60 million city C= $45 million 21. It is efficient for the team to locate in (a) City A. (b) City B. (c) City C. (d) The net return is the same for all three. 22. The net social gain in the efficient city is (a) $210 (b) $270 (c) $170 (d) $155 23. The efficient city will (just) outbid the second-highest bidder if it bids at least (a) $75 (b) S70 (c) $65 (d) $55 A person is considering placing a bet of S100 on team to win a sporting…
Use the following information to answer questions 1 to 5. A firm is deciding whether or not to enter a new market. The decision tree for the firm is provided below. The prompt below the decision tree explains how the decision tree was created. Enter Do Not Enter Allowed 0.9 Denied 0.1 3 Research No Research Good 0.7 Bad 0.3 5 6 Produce Sell Produce Sell Produce Sell 8 9 10 High 0.75 Low 0.25 High 0.25 Low 0.75 High 0.6 Low 0.4 Profit (5000s) 1200 -800 -200 1200 -800 -200 1400 -600 0 -100 0 At node 1, the firm must decide whether to enter the new market or not. The cost of attempting to enter is $100,000. The upper branch from node 2 shows that the firm has a 0.9 probability of being allowed to enter the market. If the firm is allowed to enter, it will have to pay $1,500,000 to buy the facilities required to become a part of the market. Node 3 shows that the firm will then consider doing a research study to forecast demand for their new product prior to beginning production. The cost of…