EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Chapter 15, Problem 6RQ
To determine
To explain:
Market conditions in which given quote will be applied and inefficiency in lemons model.
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an example of a market where a Bertrand model would not be plausible
NutraSweet
Aspartame is a low-calorie, high-intensity sweetener known by Monsanto’s brand name, NutraSweet. It was the key to the success of Diet Coke and Diet Pepsi in the 1980s. NutraSweet made billions of dollars, yielding very high profits. Such profits usually attract entry, but in this case entry was barred by a patent on the sweetener and because the process of creating the sweetener was expensive and difficult. Monsanto had a distinct capability—its monopoly. It had also created another strategic asset—the NutraSweet brand name as represented by its trademark ‘swirl.’ The problem was that Monsanto’s patent was about to expire. As a result, the Holland Sweetener Company began building an aspartame plant in Geleen, the Netherlands, to challenge Monsanto’s hold on the aspartame market. Holland Sweetener was a joint venture between the Japanese Tosoh Corporation and DSM (Dutch State Mines).
What did Monsanto do? Why?
What did Holland Sweetener do? Why?
Casper consumes cocoa and cheese. Cocoa is sold in an unusual way. There is only one supplier, and the
more cocoa you buy from him, the higher the price you have to pay per unit. In fact y units of cocoa will cost
Casper y² dollars (i.e. the price of y units is y dollars, hence the quadratic cost). Cheese is sold in the usual
way at a price of 2 dollars per unit. Casper's income is 20 dollars and his utility function is U(x, y) = x + 2y,
where x is his consumption of cheese and y is his consumption of cocoa.
a. Sketch Casper's budget set and shade it in.
b. Sketch some of his indifference curves and label the optimal bundle that he chooses.
c. Calculate the amount of cheese and the amount of cocoa that Casper demands at these prices and this
income, i.e. calculate the optimal bundle. (Recall that you can find the slope of any curve using the Total
Differential, i.e. the MRS formula works in general)
Chapter 15 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 15.2 - Prob. 1TTACh. 15.2 - Prob. 2TTACh. 15.2 - Prob. 1MQCh. 15.2 - Prob. 1.1MQCh. 15.2 - Prob. 2.1MQCh. 15.2 - Prob. 1.1TTACh. 15.2 - Prob. 2.1TTACh. 15.2 - Prob. 1.2TTACh. 15.2 - Prob. 2.2TTACh. 15.3 - Prob. 1MQ
Ch. 15.3 - Prob. 2MQCh. 15.4 - Prob. 1MQCh. 15.4 - Prob. 1.1MQCh. 15.4 - Prob. 2.1MQCh. 15.5 - Prob. 1TTACh. 15.5 - Prob. 2TTACh. 15.5 - Prob. 1MQCh. 15.5 - Prob. 2MQCh. 15 - Prob. 1RQCh. 15 - Prob. 2RQCh. 15 - Prob. 3RQCh. 15 - Prob. 4RQCh. 15 - Prob. 5RQCh. 15 - Prob. 6RQCh. 15 - Prob. 7RQCh. 15 - Prob. 8RQCh. 15 - Prob. 9RQCh. 15 - Prob. 10RQCh. 15 - Prob. 15.1PCh. 15 - Prob. 15.2PCh. 15 - Prob. 15.3PCh. 15 - Prob. 15.4PCh. 15 - Prob. 15.5PCh. 15 - Prob. 15.6PCh. 15 - Prob. 15.7PCh. 15 - Prob. 15.8PCh. 15 - Prob. 15.9PCh. 15 - Prob. 15.10P
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