Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Chapter 6, Problem 11PAA
To determine
To explain: The reason for short term contracts for computer chips.
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During the beginning of the 21st century, the growth in computer sales declined for the first time in almost two decades. As a result, PC makers dramatically reduced their orders of computer chips from Intel and other vendors. Explain why computer manufacturers such as Dell are likely to write relatively short contracts for computer chips.
The graph shows the demand (D), marginal cost (MC), marginal revenue (MR), and average variable cost (AVC) curves for a firm that is a
price maker for its product. The MC and AVC curves slope upward because of limited space and resources for production activity: To
increase output, the firm must bring older, less-reliable equipment out of storage, pay its workers extra for overtime hours, and so on.
If the firm is able to practice price discrimination, using the two prices indicated by the two points indicated on the demand curve, use
the area tool to outline the region that represents the net revenue (revenue minus production costs, but ignoring fixed costs). The lower
boundary of the region should be slanted.
To refer to the graphing tutorial for this question type, please click here.
Price
MR
MG
D
Quantity
The graph shows the demand (D), marginal cost (MC), marginal revenue (MR), and average variable cost (AVC) curves for a firm that is
a price maker for its product. The MC and AVC curves slope upward because of limited space and resources for production activity: To
increase output, the firm must bring older, less-reliable equipment out of storage, pay its workers extra for overtime hours, and so on.
If the firm is able to practice price discrimination, using the two prices indicated by the two points indicated on the demand curve, use
the area tool to outline the region that represents the net revenue (revenue minus production costs, but ignoring fixed costs). The lower
boundary of the region should be slanted.
To refer to the graphing tutorial for this question type, please click here.
Price
MR
MC
AVC
D
Quantity
Chapter 6 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
Ch. 6 - Prob. 1CACQCh. 6 - Prob. 2CACQCh. 6 - Prob. 3CACQCh. 6 - Prob. 4CACQCh. 6 - Prob. 5CACQCh. 6 - Prob. 6CACQCh. 6 - Prob. 7CACQCh. 6 - Prob. 8CACQCh. 6 - Prob. 9CACQCh. 6 - Prob. 10CACQ
Ch. 6 - Prob. 11PAACh. 6 - DonutVille caters to its retirement population by...Ch. 6 - Prob. 13PAACh. 6 - Prob. 14PAACh. 6 - Prob. 15PAACh. 6 - Prob. 16PAACh. 6 - Prob. 17PAACh. 6 - Prob. 18PAACh. 6 - Prob. 19PAACh. 6 - Prob. 20PAACh. 6 - Prob. 21PAACh. 6 - Prob. 22PAACh. 6 - Prob. 23PAACh. 6 - Prob. 24PAACh. 6 - Prob. 25PAACh. 6 - Prob. 26PAACh. 6 - Prob. 27PAA
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