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Consider the pricing problem of Alcoa's cookware division. Suppose that the world last for only two periods, period 1 and period 2. A saucepan last two periods, so that a saucepan that is bought in period 1 can also be used in period 2. Consumers values of using a saucepan for one period are distributed uniformly between 0 and 100. So for example, someone who values the saucepan at 30 will get utility of 60 if they use it for two periods. There is no discounting. Marginal cost of making saucepans is zero.(a) Suppose that the firm announces that it will set prices of 80 in period 1 and 45 in period 2. How many consumers will buy in each period?(b) Suppose that the firm announces that it will set prices of 80 in period 1 and 35 in period 2.How many consumers will buy in each period?(c) Suppose that all consumers with per-period valuations above 40 buy in period 1. If the firm is free to sets it price in period 2, what price will it set given the consumers who are left in the market?(d) Suppose that the firm instead rents saucepans every period. What rental price should it set?
A monopoly with a more elastic demand curve will have more market power and monopolist can earn positive profits in the long run because it has market power
Describe why the following is an example of monopolistic competition: There are a number of fast-food restaurants in town, and they compete fiercely.
The pharmaceutical industry often has the luxury of implementing pricing strategies that appear high to consumers. Take a position on the fairness of the industry's approach to pricing pharmaceutical products including offering an alternative stra..
the display creates negative externalities. government should tax the producers of holiday lighting. resources are currently overallocated to the provision of holiday lighting in Anytown. resources are currently underallocated to the provision.
Use demand and supply analysis to illustrate the changes in chicken prices described in the article. Describe what has happened in the corn and soybean-meal markets and how that has influenced the chicken market.
Assume that the market for Mexican pesos begin in equilibrium. Then, the Mexican economy experiences a severe recession. Because of the recession, the Mexican companies lower their prices. As a result of the recession and lower prices in Mexico.
Discuss the difference between the CPI measure of inflation as collected by the Bureau of Labor Statistics and the Billion Price Project (BPP), which is developed by researchers at MIT.
Does Will's frequent buyer program have the same effect on the consumption of its bagels that would occur if it simply lowered the price of one dozen bagels by 3%? Explain.
When the price of a commodity falls by Rs.2 per unit,its quantity demanded increases by 10 units. Its price elasticity of demand is (-)1. Calculate its quantity demanded at the price before change which was Rs.10 per unit. You may change Rupee[In..
Mention five ways you are affected on a daily basis by government intervention in the market. For what reason might government be involved? Is that reason justified?
Explain carefully in terms of production theory why it might be that no amount of "cracking down" can increase worker productivity at CF&D.
Think the market for personal computers. Assume that the demand is constant : the demand curve does not change. Predict the effects of the following changes on the equilibrium price of computers.
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