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A single buyer who wields monopoly power in its purchase of an item is called a monopsonist. Suppose that a large firm is the sole buyer of parts from 10 small suppliers. The cost of a typical supplier is given by C = 20 + 4Q + Q2: a. Suppose that the large firm sets the market price at some level P. Each supplier acts competitively (i.e., sets output to maximize profit, given P). What is the supply curve of the typical supplier? Of the industry?
b. The monopsonist values the part at $10. This is the firm's break-even price, but it intends to offer a price much less than this and purchase all parts offered. If it sets price P, its profit is simply: 1r = (10 - P)Qs, where Qs is the industry supply curve found in part (a). (Of course, Qs is a function of P.) Write down the profit expression and maximize profit with respect to P. Find the firm's optimal price. Give a brief explanation for this price.
How does the demand curve faced by a perfectly competitive firm differ from the market demand curve in a perfectly competitive market? Explain.
Following a collapse of sales in the wake of the sub-prime financial crisis, U.S. automobile manufacturer, Chrysler LLC, filed for bankruptcy in April 2009. It then sold its brands and various other assets to Fiat SpA. Table 7.10 below lists the esti..
Suppose that you could at zero cost monitor the efforts of the two workers. Would you want to make them work hard, or is it better to have them loaf? What payments would you offer to employer?
discuss the following questions regarding professional conduct law and your own personal valueswhy doesnt the health
Let the inverse demand curve for tennis classes is: P = 90 - 1.5Q. If the equilibrium price is $15, calculate the optimal quantity and the consumer surplus. If price increase to $30, calculate the optimal quantity and the new consumer surplus.
Giving practical example discuss the implication of leaders inflexibility in adjusting their leadership style
Discuss the strategies that a particular company employed to either obtain or sustain a competitive advantage. For example, Microsoft arguably created a competitive advantage by offering a unique suite of products that now reside on many desktops. Th..
Climate change results from particular human activities in every country across the world. To what extent can government intervention in any individual country such as Australia be effective in combating it?
Suppose production function for burritos at Chipotle is Q =4k^1/2 L^1/2.They currently own 4 units of capital and are not able to change this during the short run. The rental rate of capital is $10 and the wage rate is $20. What is Chipotle’s short r..
A patent gives a firm a monopoly in the production of the patented good. While monopoly profits provide an incentive for firms to innovate, the monopoly power imposes a cost on consumers. Why do consumers bear a cost from that monopoly?
What is the optimum and sustainable price ceiling the government could impose?
Define the terms listed below. You should write a paragraph explaining each concept as if you were writing for your 15-year-old sibling (or a high school textbook).
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