Reference no: EM131387105
Able Widget Co. is the only producer of widgets, which it can produce at a cost of $2 per widget. The demand for widgets is w=14−p
where p is the price of widgets.
(a) How many widgets would Able produce, what would be the price, and how much profit would Able make, if it maximized its profit?
(b) Now suppose Baker Widget Co. can enter the widget market by spending $4 in entry cost. Once it enters, Baker would also be able to produce widgets at a cost of $2 per widget, and Able and Baker would engage in Cournot (quantity-setting) competition. How much would each firm produce, what would be the price, and how much profit would each firm make in the Cournot equilibrium?
(c) Suppose, before Baker entered, Able could pre-commit to producing any output level. What output level would it select if it wished to maximize its profit? How much would each firm produce, what would be the price and how much profit would each firm make in this scenario?
|
What are the advantages of reducing taxes
: Degrees of price and wage flexibility play an important role in macroeconomics. Explain why. Economic performance and standards of living in the FRG and GDR prior to reunification.( Please type it) How do you forecast the value of the U.S. dollar dur..
|
|
Describe the monetary policies these models
: In some macroeconomic models the Fed’s monetary policies play a destructive role in the economy. Identify these models and describe the monetary policies these models suggest the Fed should pursue.
|
|
The way monetary policy works
: Describe the transaction the Bank of Canada makes when wanting to raise the overnight interest rate. Also outline the effects on economic activity (the way monetary policy works) when the interest rate rises.
|
|
Personal event such as car accident or assault
: Discuss whether you believe that a large, though remote, event, such as 9/11 or Hurricane Katrina affects your stress level more or less than a smaller, but more personal event such as a car accident or assault.
|
|
How many widgets would able produce
: Able Widget Co. is the only producer of widgets, which it can produce at a cost of $2 per widget. The demand for widgets is w=14−p. How many widgets would Able produce, what would be the price, and how much profit would Able make, if it maximized its..
|
|
Three stores set given they act as price competitors
: The city of Econville has three bookstores on the Main Circle that is 1 mile long. The bookstores have no costs. The distance between any two neighboring stores is the same and equal to 1/3 miles. There are 100 residents uniformly located along the M..
|
|
Determine the annual inflation rate
: The CPI has the following annual averages: Year Index 2009 201.6 2010 207.3 2011 215.3 2012 212.5 2013 217.6 A) For each year from 2010 to 2013, determine the annual inflation rate.
|
|
Equation for the demand curve facing cereal makers
: A unit circle representing the dimension of ”mouth feel” in breakfast cereals has 200 con- sumers spread uniformly along it. All consumers buy either one package of cereal a week or none at all (in which case they eat bread) and incur disutility c = ..
|
|
What is the effect of this policy on output
: Origins of the Depression. In tracing the origins of the Great Depression, Berkeley economist Christina Romer argues that the U.S. suffered a large fall in aggregate demand following the 1929 stock market crash. Knowing that the U.S. was on the gold ..
|