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A manufacturer of CD players currently sells them domestically for price v1, and allows foreign customers to purchase them by mail for price v2 where v1, v2 are the domestic and foreign reservation prices The problem is that frequent travelers are tempted to purchase the CD players domestically, then sell them overseas. Assume risk-neutrality.
a. How high would transportation costs/tariffis have to be to render this practice unprofitable for travelers?
b. Now suppose that transportation costs and tariffis are zero, but each CD player breaks down in the first year with probability p. Assume for simplicity that consumer valuation of a good that breaks down during the first year is zero. The manufacturer attempts to stop arbitrage by voiding all warranties overseas, unless the CD player was purchased directly through the mail. Give the necessary condition relating v1, v2, and p for the manufacturer to be successful.
What are the factors that affect pay differentials? How does each factor increase or decrease relative wages?
Determine whether each would cause a shift of the aggregate demand curve, a shift of the aggregate supply curve, neither, or both. Which curve shifts, and in which direction What happens to aggregate output and the price level in each case
A company produces an electronic timing switch that is used in consumer and commercial products. The fixed cost (CF) is $73,000 per month, and the variable cost (CV) is $94 per unit.
statements that best describes the idea of a “consumption vocabulary."People who have a larger vocabulary consume more .
Aztec Enterprises depends heavily on advertising to sell its products. Management at Aztec is allowed to spend $2 million monthly on advertising, but no more than this amount.
Is the firm minimizing costs? If not, what steps should it take to lower costs and still produce the same level of output?Is the firm minimizing costs? If not, what steps should it take to lower costs and still produce the same level of out..
The price elasticity of demand for health care is such that an increase in the price of health care will: decrease total health care expenditures. increase total health care expenditures. shift the demand for health care rightward. shift the deman..
Jim enters the town and makes a factory, which is employed by the locals. Every worker in the factory works on one machine and is able to produce 6 shirts per hour. The cost of running the machine is half a loaf of bread per hour, the cost to empl..
Suppose that due to a new government study, consumer preferences for chicken suddenly increase. In the model of consumer theory, this would be represented by, During the 1990s, some countries lifted price ceiling on eggs.
The value for F must make Matt simi- larly indifferent: Solving this equation yields Thus, the strategy profile presented is a subgame perfect Nash equilibrium when and Given this equilibrium, let's calculate the probability of Fiona and Matt e..
A monopolist has two types of customers. There are 100 Type A, who will each pay up to $10 for a single unit of the good, and 50 of Type B, who will each pay up to $8. Neither is willing to purchase additional units at any price. If it must charge..
What level of output should this firm produce in order to maximize profit or minimize losses - and how many firms in total will there be in this market?
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