ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Pre-mixed concrete is an important input for the construction industry. Concrete cannot be stored or transported over long distances as it begins to set after only a few hours. For this reason, only the three local firms—Aggregate Inc., Big Industries and ConCorp—are in a position to compete in the market. Moreover, the capital and regulatory requirements for constructing a new concrete plant are substantial, creating an effective barrier to entry. Pre-mixed concrete is regarded as a homogeneous good by the construction industry. Inverse demand in the market has been estimated to be,P = 670 − Q/40,where P represents the price of a cubic metre of concrete in dollars, and Q is the total number of cubic metres of concrete supplied into the market on a given day. At present the three firms appear have identical production costs, with each firm facing fixed costs of $400,000 per day and a marginal cost of $190 per cubic metre. Big Industries and ConCorp estimate that the proposed merger…arrow_forwardNeed answers to all questionsarrow_forwardGiven that MR = P"(1 + 1/Ep) = p*((Ep+1)/Ep) where Ep is the price elasticity of demand, if marginal cost is constant at $20 over the range of current potential production and the price elasticity of demand = -2.0, then the profit maximizing price to charge is: $35 $45 $30 $40arrow_forward
- Pre-mixed concrete is an important input for the construction industry. Concrete cannot be stored or transported over long distances as it begins to set after only a few hours. For this reason, only the three local firms—Aggregate Inc., Big Industries and ConCorp—are in a position to compete in the market. Moreover, the capital and regulatory requirements for constructing a new concrete plant are substantial, creating an effective barrier to entry. Pre-mixed concrete is regarded as a homogeneous good by the construction industry. Inverse demand in the market has been estimated to be,P = 670 − Q/40,where P represents the price of a cubic metre of concrete in dollars, and Q is the total number of cubic metres of concrete supplied into the market on a given day. At present the three firms appear have identical production costs, with each firm facing fixed costs of $400,000 per day and a marginal cost of $190 per cubic metre. Big Industries and ConCorp estimate that the proposed merger…arrow_forward******ONLY ANSWER PART 3 IN PICTURE PLEASE**** Demand for Thunder games in Oklahoma City is given by: P(0)=430-20 Seattle does not currently have an NBA team, but they would like to attract the the Thunder. ok ok ok Demand for Thunder games in Seattle is given by: P (Q) = 490 -20 The marginal cost of production in both cities is constant at MC = 70. Suppose that the Thunder faces an extra fixed cost of 10000 in Seattle because they need to build a new stadium if they move. If the Thunder decides to stay in Oklahoma City, they don't need to pay the fixed cost. Cities can still offer bids to attract the team. a) Will the Thunder move to Seattle? b) How much is the winning bid? c) What is the profit plus bid for the Thunder? d) What is the value minus bid for the winning city?arrow_forwardPre-mixed concrete is an important input for the construction industry. Concrete cannot be stored or transported over long distances as it begins to set after only a few hours. For this reason, only the three local firms—Aggregate Inc., Big Industries and ConCorp—are in a position to compete in the market. Moreover, the capital and regulatory requirements for constructing a new concrete plant are substantial, creating an effective barrier to entry. Pre-mixed concrete is regarded as a homogeneous good by the construction industry. Inverse demand in the market has been estimated to be,P = 670 − Q/40,where P represents the price of a cubic metre of concrete in dollars, and Q is the total number of cubic metres of concrete supplied into the market on a given day. At present the three firms appear have identical production costs, with each firm facing fixed costs of $400,000 per day and a marginal cost of $190 per cubic metre. Big Industries and ConCorp estimate that the proposed merger…arrow_forward
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