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Pear Inc. is a monopolist producing the iWatch, a wristwatch mobile communication device. The iWatch is a device that will last for exactly two periods, after everyone will switch to Boogle Glass, a eyeglass mobile communication device that is not yet available. Demand for the use of the iWatch is R = 144 - 3Q in both periods. Pear can produce the iWatch at a marginal cost of zero. 1. Suppose that Pear is able to commit to a production plan for the iWatch in both periods. Write down Pear's maximization problem under commitment. 2. If Pear is able to commit, what is its optimal production plan? 3. What is the price of an iWatch in each period? 4. Now suppose that Pear chooses how much to produce in each period, with no commitment. Given that it produces Q1 in period 1, how much should Pear produce in Period 2? 5. Without commitment, what should consumers expect the period 2 price to be once they observe Q1? 6. Given this, what is the price of an iWatch in Period 1 as a function of Q1? 7. What is the optimal quantity Pear produces in Period 1? 8. Does Pear make more profit with or without commitment? Explain your answer by either calculating profit or using your knowledge of durable goods models from class.
Does the government pricing mandate satisfy the Kaldor-Hicks Criterion relative to thestatus quo? Is the government pricing mandate Pareto superior to the status quo? (Usechanges in consumer and producer surplus as your measures of the value of the p..
Suppose that there are 150 houses in the community with 2,000 square feet (providing services that rent for $10,000 per year). The interest rate is 4% and with proper maintenance all of the houses will last forever. In an election the population deci..
Explain the relationship between customers, Businesses and Government in determining the extent of economic activity. Is there a disproportionate degree of power between the Business , Households and Government sectors in answering the Central Econom..
1. Bridget has a limited income and consumes only wine and cheese; her current consumption choice is four bottles of wine and 10 pounds of cheese. The price of wine is $10 per bottle, and the price of cheese is $4 per pound. The last bottle..
1.question why does a business need to understand elasticity of demand?2. the schedule below is for beer pricequantity
Agricultural scientists are working on developing an improved variety of Roma tomatoes. Marketing research indicates that customers are likely to bypass Romas that weigh less than 70 grams.
Suppose Texas(an oil producing state) has been proposing the implementation of a tariff on oil imports. If the world price of oil declines significantly , the chance that the proposal will be implemented will increase
How many nurses does National Hospital employ, and what wage will National pay its nurses, what is the deadweight loss arising from monopsony?
econometrics homework.2.12nbspnbsp table 2-9 gives data on the consumer price index cpi for all items 1982-1984100 and
Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 Why do investors often buy or sell stock when new information is released about a firm? What does the analyst believe Apple needs to do to cal..
welform reform1. what happens to the number of people on welfare since 1994? what explains the change over
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