Consider two gas stations. One is located at a major intersection used by people commuting from populousneighbourhoods to jobs located in the downtown area. The other is located on the outskirts of the city. Both gas stations sell high-grade or premium-grade gas for a higher price than low- grade or regular-grade gas. However, the gas station along the more congested route charges higher gas prices for all grades than the station on the outskirts of town. Product differentiation within and among these gas stations is based on which of the following? Check all that apply. Style Location Service Physical differences True or False: Positive short-run profit can occur as a result of advertising in a monopolistically competitive market.
Q: You open the newspaper and read that Europe is headed for a recession. Use the Fed model to forecast…
A: The economic shocks are the sudden change in the demand and supply within the economy. It happens…
Q: Government officials must decide how to reduce the amount of Magentum being adulterated in the…
A: Government officials must decide how to reduce the amount of Magentum being adulterated in the…
Q: What is total fixed cost when output is 2, fixed cost is 25, and average cost is 30
A: Fixed cost are such cost that do not vary with the level of output i.e it remains constant at every…
Q: Define the SES and health gradient. b) Give three ways in which the SES and health gradient is…
A: Health economics is a branch of economics that studies the production and consumption of health and…
Q: We are evaluating a project that costs $729,600, has an eight-year life, and has no salvage value.…
A: The cash break-even, accounting break-even, and financial break-even points are among the different…
Q: In the figure at right, at which output level is this firm earning negative economic profits? OA. 12…
A: Profit refers to the financial gain earned by a business or an individual after all expenses and…
Q: John Henry can prepare his own tax return in 15 hours or hire Mary Jane, who is a a tax specialist,…
A: In economics, opportunity cost refers to the values or benefits that a company, business owner, or…
Q: “In 2022, India’s GDP was $3,386.4 billion whereas its GNP was $3,370.15 billion”. The reason for…
A: The objective of the question is to understand the difference between Gross Domestic Product (GDP)…
Q: One way of measuring standard of living is by using real GDP per capita. a) Complete the table below…
A: Gross domestic product is the summation of a country's final goods and services. An increase in GDP…
Q: Consider a macroeconomy where the current population is 0.8 million people. Gross domestic private…
A: Consumption spending is spending of households on final goods and services.Investment is purchase or…
Q: The graph shows the market for walnuts The government introduces a price support for walnutsand sets…
A: The demand curve depicts the quantity demanded at each price level, keeping other factors of demand…
Q: The table below represents Sue's preferences for bottled water and soft drinks, the combination of…
A: Budget constraints shows the relationship between the two goods , their prices and the income of…
Q: Which of the below statement is a micro-economics concept? A. The South African GDP grew by 0.6%…
A: Microeconomics refers to the study of what is likely to happen (tendencies) when individuals make…
Q: Daniele has an income of 100 and he has to spend it to buy pencils and pens. To him, the two goods…
A: Utility refers to the happiness or satisfaction that an individual get from the consumption of a…
Q: = Firm A has cost function c(q, r, w). At output q = 4 total cost is c(4, r, q) = 60, and at output…
A: It can be defined as a concept that shows the amount of expenditure and any other sacrifice such as…
Q: Complete the table below calculating Real GDP for all years (show your work for at least one year!)…
A: A measure of economic production in an economy that takes current prices into account is called…
Q: Assume a competitive firm faces a market price of $75, a cost curve of: C = 1.00q² +50q + 1,600 and…
A: Profit is the difference between the total revenue and the total cost of a firm. Per unit profit is…
Q: After graduating college Allen wants to start a business selling hats. He has saved $10,000 which…
A: The person saved $10000 to start an online store. The person's father recommended to invest at…
Q: 10. The distribution of income is correlated with the distribution of human capital. A)…
A: Human capital refers to the aggregate abilities, knowledge, experience, and capacities moved by…
Q: Assume a Cobb-Douglas production function of the form: q=10L0.98K0.88 What type of returns to scale…
A: Return to scale is the concept that examines how a percentage change in all inputs (e.g., labor,…
Q: draw an S&D graph with a price floor ▪ identify Qp, Qe, Qs, Qd, and the floor price ■ label axes Al
A: A price floor is a government-imposed minimum price that is set over the equilibrium market price…
Q: Price and cost (dollars) 70 60 50 40 30 20 10 0 MC₁ 50 Quantity MC₂ 100 Demand 150 The demand for…
A: The marginal cost is the change in the total cost that arises when the quantity produced is…
Q: Figure 8-7 Price $22 20- 18- 16 14 12 10. 8 6- 4- 2 0 -Tax- 5 10 15 20 25 30 35 40 45 50 D .a. $4 X…
A: Tax is an amount paid by sellers to government.Tax is an important tool for government to control…
Q: Many financial analysts and economists eagerly await the press releases for the reports on the home…
A: Economic Metric like unemployment and jobless claims are carefully examined, but it's important to…
Q: After the government passed an investment tax credit, businesses saw this an an opportunity to…
A: The loanable funds market is a theoretical structure in economics that portrays the collaboration…
Q: Fethe's Funny Hats is considering selling trademarked, orange-haired curly wigs for University of…
A: Net present value (NPV) is a financial metric used to evaluate the profitability of an investment or…
Q: "Africa is set to outperform the rest of the world in economic growth over the next two years, with…
A: Economic growth refers to the increase in an economy's capacity to produce goods and services over…
Q: Calculate the total labor cost and the marginal resource cost, and then fill in the blanks in the…
A: Total labor cost is the monetary expenditure to hire a given unit of workers. It is computed as…
Q: The market for jeans is in equilibrium with price at $36 and quantity at 6500. The government…
A: Deadweight loss is a term used in economics to describe the economic inefficiency caused by a market…
Q: With the aid of a relevant diagram, discuss the economic analysis of a quota against free trade.…
A: Free trade alludes to the economic policy and practice of permitting goods and services to be traded…
Q: Calculate total costs at 4 units of output. Do not put a dollar sign in your answer. (The 6…
A: Disclaimer- “Since you have asked multiple questions, we will solve the first three questions for…
Q: Assume that the level of autonomous consumption rises. Show in a graph what happens to the…
A: In the field of economics, the consumption function plays a crucial role as it depicts how…
Q: Problem two: E-levy and elasticity of demand for electronic transaction services Consider the…
A: Attrition rate refers to the percentage of mobile money users who are expected to discontinue or…
Q: LAST WORD Assume that you borrow $5,000, and you pay back the $5,000 plus $250 in interest at the…
A: Nominal interest rate is such interest rate which is derived before taking inflation into…
Q: Camille's variable cost, VC is his wage cost ($80 per worker per day) and his other input costs…
A: Total cost = Total fixed cost + Total variable cost Average cost = Total cost / OUTPUT MC = TCn -…
Q: A machine used to shread cardboard boxes for composting has a first cost of $10,000, an AOC of $7000…
A: The estimated value of an asset near the end of its useful life that allows it to be resold is known…
Q: White Oaks Properties builds strip shopping centers and small malls. The company plans to replace…
A: The purchased price or first cost of the equipment (FC) = $750,000The salvage value (SV) =…
Q: Aphria Corporation listed on the Toronto Stock Exchange (TSX) has the following output data. We are…
A: The table shows the relationship between the number of workers and the units of output produced.As…
Q: (Table: Total Cost and Output for All-Natural Frozen Yogurt) Use Table: Total Cost and Output for…
A: Total Revenue can be understood as the total receipt which a seller obtained after selling its goods…
Q: The Coase Theorem states that: a) As long as property rights are well defined and no…
A: The Coase Theorem basically refers to a theorem in economics that expresses that, within the sight…
Q: Blue Skies Aviation is a manufacturer of small single-engine airplanes. The company is relatively…
A: Marginal cost represents the incremental costs incurred when producing additional units of a good or…
Q: Assume that Canada and Kenya are trading partners. a.lf the real interest rate in Canada decreases,…
A: International trade means the exchange of products and services between countries. It occurs when a…
Q: Income inequalities tend to be larger in poorer countries. As countries develop, the personal…
A: Income alludes to the money or monetary benefits that an individual, business, or entity gets over a…
Q: (a) Suppose that tacos and pizza are substitutes, and that soda and pizza are complements. What…
A: Complementary goods are goods that are consumed together. When the price of one complementary good…
Q: Bright Inc. will be receiving $5,500 at the end of every month for the next 3 years. If these…
A: According to time value of money the sum of money presently has more value than the same sum to be…
Q: Assume that Russia and the US are trading partners. a.Draw a model showing the foreign exchange rate…
A: The amount that can be exchanged for another currency between countries or economic zones is known…
Q: A firm started advertising its product and this changed the product’s elasticity from -2 to -1.5.…
A: Lerner index is used to calculate the profit maximizing price when marginal cost and elasticity are…
Q: Use the following table to answer the question below. Jane's Production Possibilities Schedule…
A: The given data shows the production schedule for Green beans and corn. Pounds of green beansPounds…
Q: Which of the following statements is false? O The Marshallian demand curve will only slope downwards…
A: A Giffen good is a type of inferior good for which the quantity demanded increases as its price…
Q: Many economists predict the eventual rise of China as a "superpower" because of economic reform,…
A: The question is asking about the potential impact of China's continued development on the trade…
Step by step
Solved in 3 steps
- Gary's Gas and Frank's Fuel are the only two providers of gasoline in their town. Below is the demand schedule for the market of gasoline. Assume that the cost of producing gasoline is 3 per gallon (AC=3, FC-D0). Suppose that the two producers collude (split production and profits evenly), what are the joint profits of these two firms? Q demanded (in gallons) 10 12 4 Market price (in dollar) $22 $20 $18 $16 $14 $12 $10 $8 $6 $0 O $27 O None of these options is correct. $55 O $72 O $36 50 00 3)DuopolyMarket for mechanical pencils can be described by the following demand schedule:Price | Number of pencils demanded$6 | 80$5 | 200$4 | 320$3 | 440$2 | 560$1 | 680$0 | 800The fixed cost is $340, while the variable cost is $0.50.d) If there were two firms on the market and they agreed to cooperate, how much would eachfirm need to produce? Follow the procedure outlined in the lecture and show that the otherfirm would prefer to deviate from the agreement.e) When the firms deviate from the agreement, there is a new optimal level of output. Showwhether the firms have an incentive to deviate from that level?f) If there were two firms on the market, what would be the price and the quantity of pencilstraded if the firms couldn’t cooperate?Suppose a town only has two petrol stations, United and BP. Each could choose to charge a high price or low price, as shown in the matrix below. ВР BP charges a low price: BP has low profit; United BP charges a high price: BP has no profit; United has high profit United charges a United low price: has low profit ВР United charges a high price: has BP has average profit; United high profit; United has no has average profit profit (a) What is the dominant strategy for the above matrix (i.e., a Nash equilibrium)? Explain briefly (b) If the two petrol stations could collude, what would be the likely strategy? Explain briefly. (c) Briefly explain the principles of the 'kinked' demand curve by using an example such as pricing a product by the two supermarket giants.
- Consider any market that has a demand curve given by: Qd = 240 - 2P. Where Qd is the total quantity demanded in the market, given in millions of units and P is the market price, calculated in monetary units. Imagine that there are 2 Cournot oligopolists operating in this market with Cmg = CVme = 15 and fixed monthly costs equal to 1,400. About this market, ask yourself: a) What is the profit of each of the oligopolists? b) Imagine that one of the companies managed to implement a process innovation capable of halving its Cmg and CVme, so that they would go from 15 to 7.5. This investment implies an additional monthly expense of $1,800. Discuss the statement: "If this situation occurs, the innovative company will not implement variable cost reduction, as the quantity supplied in the market will increase very little; prices will remain very close to what they are today and its profits will not increase"10. The platypus is a shy and secretive animal that does not breed well in captivity. But two breeders, Sydney and Adelaide, have discovered the secret to platypus fer- tility and have effectively cornered the market. Zoos across the globe come to them to purchase their output; the world inverse demand for baby platypuses is given avby P=1,000-20, where Q is the combined output of blu Sydney (qs) and Adelaide (qA). vide a. Sydney wishes to produce the profit-maximizing quantity of baby platypus. Given Adelaide's choice of output, 9A, write an equation for the residual demand faced by Sydney. 19125 non c. ab. Derive Sydney's residual marginal revenue curve. Assume that the marginal and average total cost of raising a baby platypus to an age at which it can be sold is $200. Derive Sydney's reaction function. d. Repeat steps (a), (b), and (c) to find Adelaide's reac- tion function to Sydney's output choice. 18 e. Substitute Sydney's reaction function into Adelaide's to solve for…You’ve probably come across locations along the highway where there’s a Exxon-Mobil gas station on one side of the street and a Shell gas station on the other. The two gas stations are often selling us gasoline at exactly the same price. Why is this occurring?
- Complete the following table by indicating whether each of the scenarios describes the concept of tying, resale price maintenance, or predatory pricing. Scenario Tying Resale Price Maintenance Predatory Pricing Snackyville sells a wide variety of snacks to retail grocery stores. Snackyville recently released two new snacks: a popular trail mix and a much less popular granola bar. Snackyville requires grocery stores to buy 15 cases of the granola bar for every 140 cases of the trail mix ordered. Rhythm is a firm that produces mp3 players. Suppose Rhythm sells its mp3 players to retail stores for $159 each and requires those retailers to charge customers at least $179 for each mp3 player. Coolaire is the only firm producing refrigerators. It costs $1,000 to produce a refrigerator, and Coolaire sells each refrigerator for $1,200. After Chillbox, a new firm with the same costs as Coolaire, enters the market for refrigerators, Coolaire starts…Complete the following table by matching each of the scenarios to the concept of resale price maintenance, predatory pricing, or bundling. Resale Price Maintenance Predatory Pricing Scenario Citron is a firm that manufactures electric scooters. Suppose Citron sells its electric scooters to online retailers for $830 each and requires those online retailers to charge at least $840 to shoppers for each electric scooter. Hynes sells a wide variety of condiments to retail grocery stores. Hynes recently developed two new condiments: a popular barbacuffalo and a much less popular green ketchup. Hynes requires grocery stores to order 10 bottles of the green ketchup for every 100 bottles of the barbacuffalo bought. Warm Winds is the only firm producing air fryers. It costs $430 to produce one air fryer, and Warm Winds sells each air fryer for $850. After Sirocco, a new firm with the same costs as Warm Winds, enters the market for air fryers, Warm Winds starts selling its air fryers for a price…Gary's Gas and Frank's Fuel are the only two providers of gasoline in their town. Below is the demand schedule for the market of gasoline. Assume that the cost of producing gasoline is zero per gallon (AC-D0, FC-0). Suppose that the two producers collude (split production and profits evenly), what are the profits of each firm? Q demanded (in gallons) 4 6 7 8. 10 Market price (in dollar) $22 $20 $18 $16 $14 $12 $10 $8 $6 $0 $70 $72 O $36 O $76 $64 3. 2. 1,
- Answer within 45min please Suppose that Andrew’s Hotel will be open for only two days: a peak season day and anoff-peak day. Andrew has two types of costs: room construction costs and guest service costs. Thecost of servicing any guest is 50 dollars. The cost of building a room is 400 dollars, but rooms canbe used for both types of day. Inverse demand for peak days is P = 1000 −Q, and demand foroff-peak is P = 500 −2Q.What prices should Andrew, who is looking to maximize his profits, set, and how many roomsshould he build?2. The market for dark chocolate us characterized by Cournot duopolists - Honeydukes and Wonka industries. The market demand for dark chocolate is:P = 8 - 0.005Qdwhere P is the price per bar in dollars and Qd is dark chocolate's daily quantity demanded in bars (use qh to represent the quantity of dark chocolate sold by Honeydukes and qw to represent the quantity of dark chocolate sold by Wonka Industries). Honeydukes has a constant marginal cost of $2.50 per bar, while Wonka Industries has a constant marginal cost of $3.00 per bar. The firms move simultaneously in choosing their profit-maximizing quantity of output.a. Given the firms move simultaneously, what is the equation for Honeydukes' reaction function with qh expressed as a function of qw?b. Given the firms move simultaneously, what is the equation for Wonka's reaction function with qw expressed as a function of qh?c. What quantity of dark chocolate will each firm produce in equilibrium and what price will be established for a…a) A Dutch Brewing company produces Heineken beer, assume further that the marginal cost of producing a six pack of Heineken Beer is $6. Dutch Brewing company sells Heineken in two different Markets namely Africa and Europe whose inverse demand functions are ?? = 24 − ??and ?? = 12 − 0.5?? respectively.Requireda) Calculate the profit maximising Price-Quantity combinations in these two markets Africa and Europe.b) With this Pricing strategy calculate the profit. c) If competitive output (P=MC=6) for Africa is 18 and Europe is 12, Compute the deadweight losses in the two markets. d) Clearly illustrates that the third degree price discrimination is welfare improving over a single price policy. e) Suppose these markets were no longer separated. How would you construct the market demand in this situation? Would the monopolist’s profit-maximizing single price still be 15?