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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Chapter 16, Problem 1.1CE
To determine
To describe: Whether lee entitled to erode and displace dominant firms like coach with their upscale business model.
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Based on the best available econometric estimates, the market elasticity of demand for your firm’s product is −3. The marginal cost of producing the product is constant at $100, while average total cost at current production levels is $175.Determine your optimal per unit price if:Instructions: Enter your responses rounded to two decimal places.a. you are a monopolist.
b. you compete against one other firm in a Cournot oligopoly.
c. you compete against 19 other firms in a Cournot oligopoly.
QUESTION 2: WORD LIMIT – MAXIMUM 500 WORDS
Using the Monopoly model, show using diagrams how a monopolist may sustain abnormal profits for the indefinite future. Should the competition commission litigate against firms who have a dominant market position? In your answer, make sure you use a diagram, list the assumptions for the model, and give examples of real world markets that may be dominated by monopolists. The diagram used should be your own and not taken from another source. (
The figure below illustrates the practice of international price discrimination by a Chinese
shoes company. Figure (a) shows the domestic demand (D) and marginal revenue (MR)
schedules faced by the Chinese shoes company in China. Figure (b) shows the demand and
marginal revenue schedules faced by the same company in Thailand. Figure (c) shows the
combined demand and marginal revenue schedules for the two markets, as well as the
company's average total cost (ATC) and marginal cost (MC) schedules of shoes.
(a) China
(b) Thailand
(c) Total Market
12
12
12
10
10
10
8
MC ATC
6
6
2
2
MR
MR
MR
2
6
2
4 6
8
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14 16
Quantity of Shoes
Quantity of Shoes
Quantity of Shoes
4.1 In the absence of international price discrimination, the Chinese shoes company would
charge a uniform price to Chinese and Thai customers (Assuming no transportation costs).
Determine the firm's profit maximizing output and price, as well as total profit. How much profit
accrues to the firm on its Chinese sales and on its…
Chapter 16 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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