Reference no: EM13967419
Monopolistically Competitive Equilibrium
Soft Lens, Inc., has enjoyed rapid growth in sales and high operating profits on its innovative extended-wear soft contact lenses. However, the company faces potentially fierce competition from a host of new competitors as some important basic patents expire during the coming year. Unless the company is able to thwart such competition, severe downward pressure on prices and profit margins is anticipated.
A. Use Soft Lens's current price, output, and total cost data to complete the table:
Price ($)
|
Monthly Output (million)
|
TotalRevenue ($million)
|
Marginal Revenue ($million)
|
Total Cost ($million)
|
Marginal Cost ($million)
|
AverageCost ($million)
|
Total Profit ($million)
|
$20
|
0
|
|
|
$0
|
|
|
|
19
|
1
|
|
|
12
|
|
|
|
18
|
2
|
|
|
27
|
|
|
|
17
|
3
|
|
|
42
|
|
|
|
16
|
4
|
|
|
58
|
|
|
|
15
|
5
|
|
|
75
|
|
|
|
14
|
6
|
|
|
84
|
|
|
|
13
|
7
|
|
|
92
|
|
|
|
12
|
8
|
|
|
96
|
|
|
|
11
|
9
|
|
|
99
|
|
|
|
10
|
10
|
|
|
105
|
|
|
|
(Note: Total costs include a risk-adjusted normal rate of return.)
B. If cost conditions remain constant, what is the monopolistically competitive high-price/ low-output long-run equilibrium in this industry? What are industry profits?
C. Under these same cost conditions, what is the monopolistically competitive low-price/ high-output equilibrium in this industry? What are industry profits?
D. Now assume that Soft Lens is able to enter into restrictive licensing agreements with potential competitors and create an effective cartel in the industry. If demand and cost conditions remain constant, what is the cartel price/output and profit equilibrium?
Cadence retailers
: transactions were selected from among those completed by Cadence Retailers
|
While recognizing the non finance accounting staff as expert
: Value of this project: To adapt your communication and managerial accounting concepts to non-accounting/finance colleagues while understanding and appreciating their contributions to the enterprise. Refer to the concepts and break them down so others
|
Determining the cartel equilibrium
: The Hand Tool Manufacturing Industry Trade Association recently published the following estimates of demand and supply relations for hammers:
|
Calculating the competitive strategy
: Gray Computer, Inc., located in Colorado Springs, Colorado, is a privately held producer of high-speed electronic computers with immense storage capacity and computing capability. Although Gray's market is restricted to industrial users and a few ..
|
Monopolistically competitive equilibrium
: Soft Lens, Inc., has enjoyed rapid growth in sales and high operating profits on its innovative extended-wear soft contact lenses. However, the company faces potentially fierce competition from a host of new competitors as some important basic pat..
|
What motor efficiency at full load and unity power factor
: The field circuit has a dc voltage of 200 V, and the maximum IF is 10 A. The open-circuit characteristic of this motor is shown in Figure. Answer the following questions about the motor, assuming that it is being supplied by an infinite bu..
|
Compliance issues of the federal procurement framework
: Analyze the proposal adequacy checklist for organizing a proposal, and summarize the intrinsic value of two (2) of the suggestions on the checklist.
|
Which rocks deform and the chemical and physical factors
: Identify the ways in which rocks deform and the chemical and physical factors that are involved in the deformation process.
|
What behaviors do you look for when building your teams
: What behaviors do you look for when building your teams? Discuss what you believe are the most critical things to consider when forming a team.
|