Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Two firms compete in a homogenous product market where the inverse demand function is P = 10 - 2Q (quantity is measured in millions). Firm 1 has been in business for 1 year, while firm 2 just recently entered the market. Each firm has a legal obligation to pay one year's rent of $1million regardless of its production decision. Firm 1's marginal cost is $2, and firm 2's marginal cost is $6. The current market price is $8 and was set optimally last year when firm 1 was the only firm in the market. At present, each firm has a 50 per cent share of the market.
a. Why do you think firm 1's marginal cost is lower than firm 2's marginal cost?
b. Determine the current profits of the two firms.
c. What would happen to each firm's current profits if firm 1 reduced its price to $6 while firm 2 continued to charge $8?
d. Suppose that, by cutting its price to $6, firm 1 is able to drive firm 2 completely out of the market. After firm 2 exists the market, does firm 1 have an incentive to raise its price? Explain.
e. If firm 1 engaging in predatory pricing when it cuts its price from $8 to $6? Explain.
Consider the following two mutually exclusive projects: Whichever project you choose, if any, you require a 15 percent return on your investment. a. If you apply the payb
Samuel Construction Company engaged in a contract to construct a building on 1 July 2011 with completion of the contract by the 30 June 2014. The contract price amounted to a tota
You are the manager of a firm that sells output at a price of $40 per unit. You are interested in hiring a new worker who will increase your firm's output by 2,000 units per year.
1. A country has the per-worker production function y t = 6 k t 0.5 where y t is output per worker and k t is the capital-labor ratio. The depreciation rate is 0.1 and t
Cash is the other form of fund although in a narrow sense, this refers to a supply which can be drawn upon as per to the need. Here the term cash involves both cash and cash equiva
Manufacturing Concern to Organization There are three manufacturing centres as Making, Packing and Finishing. These are supported through five support departments, namely Mai
what is the meaning of classification of cost in relation to variability?
Importance of Cost Classification Analysis of cost behaviour is significant to all organizations for effective management. It is since many organizations have a unique cost st
As controller for Edmonton Cosmetic Hospital, you are looking into the possibility of utilizing Activity- Based-Costing to assign overhead costs to patient surgeries. As a first st
In January 2012, the management of Stefan Company concludes that it has sufficient cash to permit some short-term investments in debt and stock securities. During the year, the fol
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd