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Your consulting firm was just granted an exclusive contract for your state. You now must decide your pricing policy, given the following relationships: P = $1400 – 0.0004Q MR = $1400 – 0.0008Q AVC = $1000 where P is the price, Q the quantity, and AVC the average variable cost. The firm will encounter no fixed costs, and all revenue is after taxes. As your firm has been granted an exclusive contract, your pricing and output decisions will be those of a monopolist. Tasks: 1. Using the data above, calculate the output the firm will provide. 2. Determine the price at this output level. 3. Complete the Microsoft Excel Template given below using the data in the problem. 4.Check whether your data is consistent with your calculations in question 1. Why or why not? 5.Now assume that the state decides to give as many contracts as it can for the same activity, so your firm is now operating in a perfectly competitive market. How will your price and output decisions change? Explain the differences and why these changes happened.
According to The Tax Foundation, an independent tax policy research organization, “the first U.S. state to levy a gasoline tax was Oregon, which enacted a 1-cent per gallon tax in February 1919. Draw a supply and demand graph for gasoline in 2006. A..
Assume that the demand for plastic surgery is price inelastic. Are the following statements true or false? Explain your answer for full credit. ?When the price of plastic surgery increases, the number of operations decreases. The percentage change in..
What will happen to the equilibrium price and quantity of new cars if, simultaneously, the price of automobile insurance (a complement) increases and the price of steel decreases
A boat is purchased by financing $40000. The loan is to be paid over a 5 year period with annual payments based on a 12% interest rate. Each successive payment is scheduled to be 10% greater than the previous one. Determine the size of the smallest p..
In the Bismarck model,
What are the four stages of team performance? How does effective management of each stage ensure team success? How can managers and team leaders ensure success in situations when physicians are involved? Name the two situations in which most organiz..
Suppose that the demand for labor is summarized by the equation: wD = 40 – 10 LD. The equilibrium wage is ___ and the equilibrium labor force is ____:
Money demand shocks will not affect the output level so long as the Fed pegs interest rates. True or false? Use an IS-LM diagram to explain your answer.
Calculate the own price elasticity of demand for the demand curve P= 15-3X at prices and compare the outcomes.
If you have four years child by the time he/she turns eighteen and you need a 100,000 for them and the interest rate is 4%. How much you need to save now? What is the present value? Andrew has $500 he put the side $500 semi annual and he planned to k..
Consider the construction of handmade rugs moreover assembly line robots in Canada and India.
Use the aggregate expenditure model developed in this chapter to explain the following statements: Coming amid continued turmoil in the financial and credit markets, the report sent stocks lower, with the Dow Jones Industrial Average falling 146.70 p..
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