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Two cournot duopolists produce in a market with a demand P(Q)=100-Q. The marginal cost for Firm 1 is constant and equals 10. The marginal cost for Firm 2 is constant and equals 25. The two firms want to merge, which would leave a monopoly. They argue that the merger should be approved because all output would be at the low margina cost of 10 after the merger. ie, firm 2's facilities would be shut down and all output shifted to firm 1's more efficient facilities.
a. What would be the effect on the equilibrium price of allowing the merger to proceed?
b. Assuming that firm 1 is buying firm 2, once the deal is complete, will its profits be high enough to come out ahead after having bought out firm 2?
A multiple regression analysis based on a information set that consists of thrity observations yielded the following estimated demand equation:
Estimate simple linear regression models for both the raw data and the logs, estimating both the intercept and the slope.
There are three firms in an economy: A, B, and C. Firm A buys $250 worth of goods from firm B and $200 worth of goods from firm C, and produces 200 units of output, which it sells at $5 per unit. Firm B buys $100 worth of goods from firm A and $15..
This is, in part due to the fact that the company spent 1.2 billion developing the drug and obtaining FDA approval. An economist has estimated that, at the current price of $1.25 per pill, the own price elasticity of demand for the drug is -2.5.
In the economy of Cape Despair, the subsistence real wage rate is $15 an hour. Whenever real GDP per hour rises above $15, the population grows, and whenever real GDP per hour of labor falls below this level, the population falls.
Explain why we are using per capita data for food rather than the total value as the dependent variable and examine the residuals of your estimated equation to determine whether any of your years might be considered an outlier in the regression.
if demand is unit elastic (the elasticity is 1), a 1% price cut increases the quantity sold by 1% and total revenue does not change. the question is: Assume the initial price is 1 and the initial quantity demanded is 1, thus the total revenue is 1..
The Rapid Engine Corporation is a multinational producer os small gasoline and Diesel motors. Rapid hs estimated the given cost experience for a new 3.5hp engine over a sample of 122 observations.
Find the marginal utitlity for each chicken piece. What is the meaning of the marginal utitilty of the 11th piece? If the price of chicken pieces is $1.25 each, how many will you buy? If the price falls to $0.50, how many will you buy? Explain carefu..
Determine the economic advantages or disadvantages, for the United States speaker company Bose, to start a distribution center in the Czech Republic?
Gomez runs a small pottery firm. He hires one helper at $12,000 per year, pays annual rent of $5000 for his shop, and spends $20,000 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth)..
Consider an individual with preferences over consumption c and leisure l given by: u(c,l) = [(c^(1-γ ))/(1-γ)] + al where γ > 0 and a > 0 are constants. She is endowed with h hours of time to divide between working at wage w and leisure. She has no..
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