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Warner Bros. Studios sold DVD copies of its films to Blockbuster, and the studio had revenue-sharing arrangements with the rental chain for VCR tapes of its films (Bruce Orwall, Martin Peers, and Ann Zimmerman, "DVD Gains on Tape, but Economics Have Hollywood in a Tizzy," Wall Street Journal, February 5, 2002, A1.) Suppose that Blockbuster was the only place where Perkasie, PA, residents could rent movies and that the Saturday night demand function to rent L.A. Confidential on either DVD or VHS was
a. Suppose that the Perkasie Blockbuster purchased ten copies of L.A. Confidential under the studio sales arrangement. What was the Blockbuster outlet's optimal rental price?
b. Suppose that the Blockbuster outlet paid the studio $2 per copy rented under the revenue-sharing arrangement, and the outlet had ten copies in stock. What was the Blockbuster outlet's optimal rental price?
c. Compare your answers to parts a and b. V
Determine the effects of this on current aggregate output, current employment, the current real wage, current consumption, and current investment.
Calculate the 99 percent confidence interval for β2 in the earnings function example (b2 = 1.073, s.e.(b2) = 0.132), and explain why it includes some values not included in the 95 percent confidence interval calculated in the previous section.
Market economies which honor the rule of contract law can be found in the First and Third Worlds. What does this suggest about the importance of culture and the adverse side effects of globalization?
What is the elasticity of demand for this group? Is their cigarette demand elastic or inelastic?
Suppose that deposits and bank reserves pay no interest, and that banks lend deposits not held as reserves at the market rate of interest. Who pays the inflation tax (measured in nominal terms), and how much do they pay?
Harry's Auto Shop is a perfectly price discriminating seller. Harry has an uncanny ability to assess how much people are willing to pay for a car, and he sets prices accordingly.
Suppose the initial equilibrium price of haircuts is $12. Draw demand and supply graphs to show the short-run and long-run effects
What four equations describe the Pareto optimal allocation in which Harriet's utility is 8?
(Net Exports)What factors are assumed constant along the net export function? What would be the impact on net exports of a change in real disposable income?
How will the interest rate change if each borrower has more collateral?
compute the opportunity cost in forgone tanks for each additional truck producedtruck output 0 1
The design of a system is to be pursued from one of the available alternatives. Each alternative has a life cycle cost associated with an expected future. The costs for the corresponding futures are given in the following table (in millions of dol..
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