Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Question
Chapter 13, Problem 13E
To determine
To Ascertain:
After necessary observations of the given sequential game tree, propose whether the company should launch the new product.
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Use the following table to answer questions 49 and 50.
Reservation Prices and Costs in Econland for a Widget
Reservation
Cost to
price for
one widget
$18
make oneS
widget
$2
person
person
D1
S1
D2
16
4
S2
D3
14
6.
S3
D4
12
8.
S4
D5
10
10
S5
D6
8.
12
S6
D7
14
S7
D8
4
16
S8
D9
18
S9
D10
20
S10
49. The table above provides reservation prices and costs of the inhabitants
of Econland. Suppose we have an allocation where D7 consumes a widget
but D1 does not. This is not Pareto Efficient because:
a. D1 could give D7 $1 for the widget, and both are better off
b. D1 could give D7 $10 for the widget, and both are better off
c. D1 could give D7 $20 for the widget, and both are better off
d. D1 could give D7 $5 for the widget, and both are better off
e. None of the above
50. Suppose we have an allocation where S1, S2, S3, S4 and S5 produce a
widget, and D1, D2, D3, D4 and D5 consume a widget.
a. This is not Pareto efficient because we can have S9 sell to D1 for
$18, S8 sell to D2 for $16, S7 sell…
Suppose there are only two automobile companies, Ford and Chevrolet. Ford believes that Chevrolet will match any price it sets, but Chevrolet too is interested in maximizing profit. Use the following price and profit data to answer the following questions.
Ford's Chevrolet's Ford’s Chevrolet’s
Selling Selling Profits Profits
Price Price (millions) (millions)
$ 4,000 $ 4,000 $ 8 $ 8
4,000 8,000 12 6
4,000 12,000 14 2
8,000 4,000…
Chapter 13 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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