Reference no: EM133205634 , Length: Word count: 2 Pages
Assignment Task 1: NOVA (Northern Virginia Community College), located in Fairfax County, in Virginia, has been looking for alternative sources of revenue. The committee in charge of identifying those opportunities has reached a decision to rent spaces that could be better utilized and, at the same time, be appealing to potential renters. The first targeted area is the student union, and the idea is to use the area for one or two bookstores. Potential candidates include Barnes and Noble and a local chain that has grown rapidly in the past 5 years, among others. The rent the college can charge per square foot of space depends on the firms' profit (excluding rent) and hence on whether the market has a monopoly or a Cournot duopoly. Which number of stores is better for the college in terms of rent? Which is better for students? Why?
Assignment Task 2: Alfred has recently started a new venture: a massage center in Tampa Bay, FL. With the reputation and experience accumulated in your career as a business consultant, you were chosen to help the company increase their pool of profit. Alfred wants to know how much to charge to maximize profits. The following table provides you with the available information that will help to perform your analysis.
| |
Quantity |
TC |
| Price |
| $25.00 |
0 |
$130 |
| $24.00 |
10 |
$275 |
| $23.00 |
20 |
$435 |
| $22.50 |
30 |
$610 |
| $22.00 |
40 |
$800 |
| $21.60 |
50 |
$1,005 |
| $21.20 |
60 |
$1,225 |
For each level of output, calculate total revenue, marginal revenue, average cost, and marginal cost. What is the profit-maximizing level of output for the treatments and how much will the firm earn in profits?
Assignment Task 3: One theory of oligopoly is the cartel theory.
a. State the key behavioral assumption of the cartel theory.
b. Describe the problems associated with forming and maintaining a cartel.