Define the rivalness ratio of a good in a way

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Reference no: EM131009721

a. Define the rivalness ratio of a good in a way that could be understood by someone who has taken principles of microeconomics course, but has not studied any other economics. Explain how we can tell that the rivalness ratio of a good does not depend on the units the output of the good is measured in.

b. What is the economic significance of a rivalness ratio equal to 1? Be as complete and specific as possible.

c. It costs Apple about $240 to manufacture a new iPhone 6s Plus (64GB). The average cost of the 6s Plus (64GB) phones that have been produced is about $500. What do you think are the most important reasons why this average cost is more than twice the cost of a new iPhone 6s Plus (64GB)?

d. What is your best estimate of the rivalness ratio of an iPhone 6s Plus? Explain.

e. The list price of an iPhone 6s Plus (64GB) is $749. What can be said about the efficiency or inefficiency of this price? Be as specific as possible. Many 6s Plus (64GB) phones sell for less than $749. Do the lower prices lead to a more efficient number of 6s Plus (64GB) sales than if all the phones sold for $749? Explain. How can it be a profitable strategy for sellers to sell 6s Plus (64GB) phones for less than $749?

Reference no: EM131009721

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