Economics (Irwin Economics)
21st Edition
ISBN: 9781259723223
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 15, Problem 5RQ
To determine
Impact of innovation.
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units. (Enter your response as a whole number.)
Industry Z is made up of the following firms. One firm makes up 40% of the total market sales, one of the firms make up 25%, one of the
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Suppose that the paper clip industry is perfectly competitive. Also assume that the market price for paper clips is 2 cents per paper clip. The demand curve faced by each firm in the industry is: LO10.3Ā a. A horizontal line at 2 cents per paper clip. b. A vertical line at 2 cents per paper clip. c. The same as the market demand curve for paper clips. d. Always higher than the firmās MC curve.
Chapter 15 Solutions
Economics (Irwin Economics)
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- 1. The table below represents the demand for Widgets, Inc., which has a monopoly in the sale of widgets. Calculate total revenue and marginal revenue for the levels of output given. Draw the demand curve and the marginal revenue curve in a same graph. Quantity 0 1 2 3 4 LO 5 Price $25 21 17 13 9 LO 5arrow_forward5. Suppose that two oil companies - BP and Exxon - own adjacent natural gas fields. The profits that each firm earns depends on both the number of wells it drills and the number of wells drilled by the other firm. The table below lists each firm's individual profits: Šxxon Drill one well Drill two wells Drill one well S10 million, $10 million $6 million, $12 million BP Drill two wells S6 million, $12 million $8 million, $8 million BremSe a. Does BP have a dominant strategy? If yes, describe it. b. Does Exxon have a dominant strategy? If yes, describe it. c. Is there a Nash equilibrium? If yes, describe it. d. Suppose BP and Exxon can collude, what will be their choices?arrow_forwardTable 18-14 Suppose that two oil companies-BP and Exxon-own adjacent natural gas fields. The profits that each firm earus depends on both the member of wells it drills and the number of wells drilled by the other firm. The table below lists each firm's individual profits: Exxon Drill one well Drill two wells BP Drill one well BP Drill two wells Exxon's profit $10 million BP's profit $10 million Exxon's profit $6 million BP's profit $12 million Exxon's profit $12 million BP's profit $6 million Exxon's profit $8 million. BP's profit $8 million Refer to Table 18-14. Does BP have a dominant strategy? If so, describe it. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac) BIUS Paragraph Arial 5 ē°ē°ē°å 10pt 89. M XX, 833 >>() āøO HE [+ V A AV ā Z X T 94 Ī©ĪĪ *** 68.88arrow_forward
- 7. A car manufacturer builds both left-hand and right-hand drive cars. It estimates that its costs and the demand faced in each of these respective markets can be modelled by the functions below P1 = 520 ā 3Q1 P, = 720 ā 4Q2 - TC = 100Q1 + 120Q2 + 4Q1Q2 What is the maximum profit the firm could make? O 24300 O 24800 25300 25800 26500 O0000arrow_forward11. Comparing different market structures In which of the following market structures do firms produce at an output level that is both resource allocative efficient and productive efficient? O Perfect competition only O Monopoly and oligopoly only O Monopolistic competition only O Perfect competition, monopolistic competition, monopoly, and oligopolyarrow_forwardFill in the columns in the following table. (Enter your responses as whole numbers.) TFC TVC $5 $0 5 3 q 0 1 2 3 4 5 5 5 5 5 5 5 9 16 25 36 Ō¼Õ MC P = MR $5 5 5 5 S LO 5 40 5 5 TR $0 TC $5 Profit $-5arrow_forward
- penumy.edu LA0 u ten Que Complio St QUESTION 2Y MC 14 13 ATC MR ē» S8R Shce tm the above e is perng monopeicaly competve indutry in the long n we an expect o see Othe lypical fm's econom prolts expand as preduction hecomes more efficient Ohe lypal em praducng theimu po on ATC curve O mar mseterng the ndty un ecunomie profs ah empand share of the tet QUESTION 23 Suppese an indstry has utal sales f 25 millon per y The teo larpest fems have sales of $6 millen each the id largest fem has sales of 2 miion, and the fourth largest f has sales of S1 millon The rm conceation ratio for thin nduty O 30 percent O 1 percent O25 percent O 60 percent QUESTION 24 Suppose there are four frm in an industry The market shares of the four fems are 5 percent, 20 percent 35 percert, and 40 percent The Hurfindahi Hischan index tor that industry O 100 O6 650 O 1.250 O 3250 Chck Sane and Sulmit to ae and aulimit. Click Sate All Anaue to se all aencers Sa Aarrow_forwardQuestion 2 AnimoSpace Support ? Given the perfect competitor firm's supply curve below, what is the shutdown price? P(cost) MC AC 80 AVE 70 60 50 40 30 20 (10,10) 10 10 20 30 40 50 60 70 80 90 100 110 12 Qty Break-even quantity: Shutdown price: O 50 O 70 O 35 IS O 80 O 5 a Question 3 Which of these market structures is not correctly described? Monopolistic Nliaonoly Mononolhe o searcharrow_forwardSuppose that the pen-making industry is perfectly competitive. Also suppose that each current firm and any potential firms that might enter the industry all have identical cost curves, with minimum ATC = $1.25 per pen. If the market equilibrium price of pens is currently $1.50, what would you expect it to be in the long run? LO11.2 Ā a. $0.25. b. $1.00. c. $1.25. d. $1.50.arrow_forward
- Consider the diagram at the right depicting the revenue and cost conditions faced by a monopolistically competitive firm. 40- What are the total revenues experienced by this firm? $ 2800 35- MC What are the total costs experienced by this firm? S 2800 ATC What are the economic profits experienced by this firm? S0. This firm is more likely in long -run equilibrium because 22 O A. economic profits will stimulate entry (which is a long-run change). O B. normal profits will stimulate entry (which is a long-run change). 18 MR O C. normal profits will not stimulate entry (which is a long-run change). D 15- O D. None of the above are true. 100 160 10- 40 80 120 160 200' 240' 280 Quantity (units per day) Revenues and Costs ($ per unit)arrow_forwardHow does a commitment to match any price cuts by other firms work to limit price competition in an oligopoly? Select one: O a. Firms that cut price get no benefit in increased market share. O b. Demand decreases as consumers anticipate a price war in the future. Oc. Government regulators step in to avoid a ruinous price war. O d. Demand increases as consumers look more favorably on this industry and its products.arrow_forwardWhich of the following statements in the full competitive market is correct? Choose an answer 1. The companies maximize their profit according to the rule Ā«price equals average total costsĀ». O 2. The companies maximize their profit according to the rule "marginal costs equal average total costs". 3. In the short term, the companies always make a profit. O 4. In the short-term market result, it always applies that the market price is above the average total costs. 5. In the long-term market result, the market price corresponds to the average total costs.arrow_forward
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