{"id":6680,"date":"2021-10-10T08:03:35","date_gmt":"2021-10-10T08:03:35","guid":{"rendered":"https:\/\/assignmenttutors.net\/blog\/eco-500-final-exams-financial-markets-homework-help\/"},"modified":"2021-10-10T08:03:35","modified_gmt":"2021-10-10T08:03:35","slug":"eco-500-final-exams-financial-markets-homework-help","status":"publish","type":"post","link":"https:\/\/assignmenttutors.net\/blog\/eco-500-final-exams-financial-markets-homework-help\/","title":{"rendered":"Eco 500 final exams | Financial markets homework help"},"content":{"rendered":"
\n

The main role of economic profits is to:
signal where resources are most highly valued by society
\u00a0\u00a0\u00a0\u00a0 allow firms to cover their production costs
\u00a0\u00a0\u00a0\u00a0 allow consumers to cover their opportunity cost
\u00a0\u00a0\u00a0\u00a0 None of the statements associated with this question are correct
If the interest rate is 3 percent, the present value of $900 received at the end of three years is:
\u00a0\u00a0\u00a0\u00a0 $891.
\u00a0\u00a0\u00a0\u00a0 $823.63.
\u00a0\u00a0\u00a0\u00a0 $799.64
\u00a0\u00a0\u00a0\u00a0 $983.45
The optimal amount of exercise is determined by comparing:
\u00a0\u00a0\u00a0\u00a0 marginal benefit and the total cost of exercise.
\u00a0\u00a0\u00a0\u00a0 total benefit and the marginal cost of exercise.
\u00a0\u00a0\u00a0\u00a0 marginal benefit and the marginal cost of exercise.
\u00a0\u00a0\u00a0\u00a0 total benefit and the total cost of exercise.
Suppose the market supply for good X is given by QXS = -200 + 5PX. If the equilibrium price of X is $100 per unit then producers’ revenue from X is
\u00a0\u00a0\u00a0\u00a0 $100.
\u00a0\u00a0\u00a0\u00a0 $300.
\u00a0\u00a0\u00a0\u00a0 $30,000.
\u00a0\u00a0\u00a0\u00a0 cannot be determined from the information contained in the question.<\/p>\n

Other things held constant, the higher the price of a good
\u00a0\u00a0\u00a0\u00a0 the lower the demand.
\u00a0\u00a0\u00a0\u00a0 the higher the demand.
\u00a0\u00a0\u00a0\u00a0 the greater the consumer surplus.
\u00a0\u00a0\u00a0\u00a0 the smaller the consumer surplus.
If cars are a normal good, what do you suppose would happen to price and quantity of a car during an economic recession?
\u00a0\u00a0\u00a0\u00a0 Price would increase and quantity decrease.
\u00a0\u00a0\u00a0\u00a0 Price and quantity would both increase.
\u00a0\u00a0\u00a0\u00a0 Price and quantity would both decrease.
\u00a0\u00a0\u00a0\u00a0 Price would decrease and quantity increase
The responsiveness of consumer demand to changes in income is called:
\u00a0\u00a0\u00a0\u00a0 income elasticity.
\u00a0\u00a0\u00a0\u00a0 own price elasticity.
\u00a0\u00a0\u00a0\u00a0 cross-price elasticity.
\u00a0\u00a0\u00a0\u00a0 neither the income elasticity, the own price elasticity, nor the cross-price elasticity.<\/p>\n

A firm derives revenue from two sources: goods X and Y. Annual revenues from good X and Y are $10,000 and $20,000, respectively. If the price elasticity of demand for good X is \u22122.0 and the cross-price elasticity of demand between Y and X is 3, then a 5 percent increase in the price of X will:
\u00a0\u00a0\u00a0\u00a0 increase total revenues from X and Y by $2,500.
\u00a0\u00a0\u00a0\u00a0 decrease total revenues from X and Y by $2,500.
\u00a0\u00a0\u00a0\u00a0 decrease total revenues from X and Y by $3,500.
\u00a0\u00a0\u00a0\u00a0 increase total revenues from X and Y by $3,500.<\/p>\n

Which of the following measures of fit penalizes a researcher for estimating many coefficients with relatively little data?
\u00a0\u00a0\u00a0\u00a0 F-statistic
\u00a0\u00a0\u00a0\u00a0 R-square
\u00a0\u00a0\u00a0\u00a0 Adjusted R-square
\u00a0\u00a0\u00a0\u00a0 None of these<\/p>\n

The demand for labor is:
\u00a0\u00a0\u00a0\u00a0 sloping upward.
\u00a0\u00a0\u00a0\u00a0 determined by MPL = W.
\u00a0\u00a0\u00a0\u00a0 the value marginal product of labor.
\u00a0\u00a0\u00a0\u00a0 derived from the profit-maximizing input condition
According to the table below, what is the average total cost of producing 145 units of output?<\/p>\n

\u00a0
\u00a0\u00a0\u00a0\u00a0 12.07
\u00a0\u00a0\u00a0\u00a0 18.97
\u00a0\u00a0\u00a0\u00a0 36.21
\u00a0\u00a0\u00a0\u00a0 77.59
Diseconomies of scale exist whenever long-run average costs:
\u00a0\u00a0\u00a0\u00a0 increase as output is increased.
\u00a0\u00a0\u00a0\u00a0 decrease as output is increased.
\u00a0\u00a0\u00a0\u00a0 remain constant as output is increased.
\u00a0\u00a0\u00a0\u00a0 None of the statements is correct.
A benefit of using long-term contracts instead of the spot exchange is:
\u00a0\u00a0\u00a0\u00a0 not needing spot checks.
\u00a0\u00a0\u00a0\u00a0 more flexibility.
\u00a0\u00a0\u00a0\u00a0 not needing to continually renegotiate the contract.
\u00a0\u00a0\u00a0\u00a0 None of the statements is correct
A relationship-specific exchange:
\u00a0\u00a0\u00a0\u00a0 is a consequence of profit sharing.
\u00a0\u00a0\u00a0\u00a0 makes firms use spot markets.
\u00a0\u00a0\u00a0\u00a0 is needed when there are specialized investments.
\u00a0\u00a0\u00a0\u00a0 is needed when there are NO specialized investments
A benefit of long-term contracts is:
\u00a0\u00a0\u00a0\u00a0 low transaction costs.
\u00a0\u00a0\u00a0\u00a0 short-term flexibility.
\u00a0\u00a0\u00a0\u00a0 the continual need to renegotiate the contract.
\u00a0\u00a0\u00a0\u00a0 None of the answers are correct
The principal is an individual:
\u00a0\u00a0\u00a0\u00a0 dependent on the agent.
\u00a0\u00a0\u00a0\u00a0 who hires an agent to achieve goals.
\u00a0\u00a0\u00a0\u00a0 hired by the agent to achieve goals.
\u00a0\u00a0\u00a0\u00a0 hired by the agent to consult with him.
By removing performance-based rewards to CEOs the profits of firms will likely:
\u00a0\u00a0\u00a0\u00a0 rise.
\u00a0\u00a0\u00a0\u00a0 fall.
\u00a0\u00a0\u00a0\u00a0 remain constant.
\u00a0\u00a0\u00a0\u00a0 None of the statements is correct.<\/p>\n

The activity known as shirking is MOST likely to occur when:
\u00a0\u00a0\u00a0\u00a0 workers are not monitored.
\u00a0\u00a0\u00a0\u00a0 the earnings of a worker are closely tied to the worker’s output.
\u00a0\u00a0\u00a0\u00a0 sanctions for shirking are high.
\u00a0\u00a0\u00a0\u00a0 firm ownership is not separated from the managerial control.
An increase in the chance of being fired:
\u00a0\u00a0\u00a0\u00a0 decreases productivity at a decreasing rate.
\u00a0\u00a0\u00a0\u00a0 decreases productivity at an increasing rate.
\u00a0\u00a0\u00a0\u00a0 raises productivity at an increasing rate.
\u00a0\u00a0\u00a0\u00a0 raises productivity at a decreasing rate.<\/p>\n

The hold-up problem arises when both the purchaser and the seller:
\u00a0\u00a0\u00a0\u00a0 behave as principals.
\u00a0\u00a0\u00a0\u00a0 are opportunistic.
\u00a0\u00a0\u00a0\u00a0 do not take advantage of the economies of scale.
\u00a0\u00a0\u00a0\u00a0 do not take advantage of the economies of scope.<\/p>\n

Which of the following is a transaction cost associated with using inputs?
\u00a0\u00a0\u00a0\u00a0 Time spent negotiating labor contracts with union workers
\u00a0\u00a0\u00a0\u00a0 Opportunity costs of negotiating the price of renting machines
\u00a0\u00a0\u00a0\u00a0 Costs of searching for a new supplier of machines
\u00a0\u00a0\u00a0\u00a0 All of the above
Suppose a firm needs to renegotiate their contract due to a decrease in the relationship-specific assets needed to complete the deal. This new contract should be:
\u00a0\u00a0\u00a0\u00a0 longer term because the marginal benefit of contracting increases.
\u00a0\u00a0\u00a0\u00a0 shorter term because the marginal benefit of contracting increases.
\u00a0\u00a0\u00a0\u00a0 longer term because the marginal benefit of contracting decreases.
\u00a0\u00a0\u00a0\u00a0 shorter term because the marginal benefit of contracting decreases.<\/p>\n

The following groups do NOT experience principal-agent problems:
\u00a0\u00a0\u00a0\u00a0 stockholders and managers.
\u00a0\u00a0\u00a0\u00a0 managers and workers.
\u00a0\u00a0\u00a0\u00a0 stockholders and consumers.
\u00a0\u00a0\u00a0\u00a0 stockholders and workers.
The cost to an employee of shirking is:
\u00a0\u00a0\u00a0\u00a0 a decrease in his flat salary.
\u00a0\u00a0\u00a0\u00a0 a decrease in the profit of the firm.
\u00a0\u00a0\u00a0\u00a0 a decrease in the sales of the firm.
\u00a0\u00a0\u00a0\u00a0 an increase in the likelihood of being fired.
The opposite of shirking is:
\u00a0\u00a0\u00a0\u00a0 long lunch hours.
\u00a0\u00a0\u00a0\u00a0 putting in maximum amount of effort.
\u00a0\u00a0\u00a0\u00a0 leaving work early.
\u00a0\u00a0\u00a0\u00a0 All of the statements associated with this question are correct.
A manager who tries to enhance worker effort by tying workers’ compensation to how many units they produce is using:
\u00a0\u00a0\u00a0\u00a0 spot checks.
\u00a0\u00a0\u00a0\u00a0 revenue sharing.
\u00a0\u00a0\u00a0\u00a0 profit sharing.
\u00a0\u00a0\u00a0\u00a0 piece rates.
Under a monopoly which of the following always holds?
\u00a0\u00a0\u00a0\u00a0 P > ATC.
\u00a0\u00a0\u00a0\u00a0 P > MR.
\u00a0\u00a0\u00a0\u00a0 P = MC.
\u00a0\u00a0\u00a0\u00a0 All of the choices are true for monopoly.<\/p>\n

The following is an example of a monopolist\u2019s source of power:
\u00a0\u00a0\u00a0\u00a0 large startup costs are needed to lay pipes to start a water utility company.
\u00a0\u00a0\u00a0\u00a0 a seven-year patent on a new drug.
\u00a0\u00a0\u00a0\u00a0 a pharmaceutical company discovers a drug that allows them to develop new drugs more cheaply in the future.
\u00a0\u00a0\u00a0\u00a0 All of the statements associated with this question are correct.<\/p>\n

You are the manager of a monopoly that faces a demand curve described by P = 220 \u2212 10Q. Your costs are C = 5 + 20Q. The profit-maximizing output for your firm is:
\u00a0\u00a0\u00a0\u00a0 10.
\u00a0\u00a0\u00a0\u00a0 5.
\u00a0\u00a0\u00a0\u00a0 20.
\u00a0\u00a0\u00a0\u00a0 3.83.<\/p>\n

Suppose perfectly competitive market conditions are characterized by the following inverse demand and inverse supply functions: P = 50 \u2212 2Q and P = 10 + 2Q. The demand curve facing an individual firm operating in this market is:
\u00a0\u00a0\u00a0\u00a0 P = 50 \u2212 2Q.
\u00a0\u00a0\u00a0\u00a0 P = 50 \u2212 4Q.
\u00a0\u00a0\u00a0\u00a0 a horizontal line at $10.
\u00a0\u00a0\u00a0\u00a0 a horizontal line at $30.
In a competitive industry with identical firms, long-run equilibrium is NOT characterized by:
\u00a0\u00a0\u00a0\u00a0 There is no excess capacity.
\u00a0\u00a0\u00a0\u00a0 P < ATC.
\u00a0\u00a0\u00a0\u00a0 P = MR.
\u00a0\u00a0\u00a0\u00a0 P = MC.
Perfectly competitive markets differ from monopolistically competitive markets in that:
\u00a0\u00a0\u00a0\u00a0 there are zero profits in the long run.
\u00a0\u00a0\u00a0\u00a0 equilibrium price is set by the minimum of the ATC.
\u00a0\u00a0\u00a0\u00a0 they each have a market supply curve.
\u00a0\u00a0\u00a0\u00a0 all of the above.
There are several models of oligopoly because:
\u00a0\u00a0\u00a0\u00a0 the actions of other firms have a profound impact on the manager\u2019s optimal decision.
\u00a0\u00a0\u00a0\u00a0 the order in which rival firms act matters.
\u00a0\u00a0\u00a0\u00a0 oligopoly is the most complicated type of market structure.
\u00a0\u00a0\u00a0\u00a0 all of the above.
A market is NOT contestable if:
\u00a0\u00a0\u00a0\u00a0 some rivals have better technology.
\u00a0\u00a0\u00a0\u00a0 consumers respond quickly to a price change.
\u00a0\u00a0\u00a0\u00a0 existing firms cannot respond quickly to entry by lowering their price.
\u00a0\u00a0\u00a0\u00a0 there are no sunk costs.
Collusion in pricing games is easier with:
\u00a0\u00a0\u00a0\u00a0 A perfectly competitive market
\u00a0\u00a0\u00a0\u00a0 A small number of firms
\u00a0\u00a0\u00a0\u00a0 The ability to punish cheaters
\u00a0\u00a0\u00a0\u00a0 A small number of firms and the ability to punish cheaters
Refer to the normal-form game shown below.<\/p>\n

\u00a0 <\/p>\n

Which of the following represents player 1’s full strategy space?
\u00a0\u00a0\u00a0\u00a0 {High, Low}
\u00a0\u00a0\u00a0\u00a0 {High, Left}
\u00a0\u00a0\u00a0\u00a0 {(High, Left), (High, Right), (Low, Left), (Low, Right)}
\u00a0\u00a0\u00a0\u00a0 {Left, Right}
Which of the following is NOT needed to sustain collusion in pricing games?
\u00a0\u00a0\u00a0\u00a0 A large number of firms.
\u00a0\u00a0\u00a0\u00a0 A small number of firms.
\u00a0\u00a0\u00a0\u00a0 Punishments for cheating.
\u00a0\u00a0\u00a0\u00a0 None of the answers is correct<\/p>\n

A monopoly produces widgets at a marginal cost of $4 per unit and zero fixed costs. It faces an inverse demand function given by P = 40 \u2212 Q. The monopoly price is:
\u00a0\u00a0\u00a0\u00a0 $22.
\u00a0\u00a0\u00a0\u00a0 $4.
\u00a0\u00a0\u00a0\u00a0 $36.
\u00a0\u00a0\u00a0\u00a0 $18.
The idea of charging different groups of consumers different prices is practiced in:
\u00a0\u00a0\u00a0\u00a0 Two-part pricing.
\u00a0\u00a0\u00a0\u00a0 First-degree price discrimination.
\u00a0\u00a0\u00a0\u00a0 Second-degree price discrimination.
\u00a0\u00a0\u00a0\u00a0 First- and second-degree price discrimination
Limited capacity is a necessary condition for a firm to use:
\u00a0\u00a0\u00a0\u00a0 Cross-subsidization
\u00a0\u00a0\u00a0\u00a0 Peak-load pricing
\u00a0\u00a0\u00a0\u00a0 Transfer pricing
\u00a0\u00a0\u00a0\u00a0 Two-part pricing
Price-matching strategies will likely enhance profits when:
\u00a0\u00a0\u00a0\u00a0 you have brand loyalty.
\u00a0\u00a0\u00a0\u00a0 customers can lie about finding a lower price.
\u00a0\u00a0\u00a0\u00a0 competitors\u2019 marginal costs are the same or higher than yours.
\u00a0\u00a0\u00a0\u00a0 None of the above
Auto insurance shows us that which of the following is a characteristic of many people?
\u00a0\u00a0\u00a0\u00a0 Risk aversion
\u00a0\u00a0\u00a0\u00a0 Risk loving
\u00a0\u00a0\u00a0\u00a0 Risk neutral
\u00a0\u00a0\u00a0\u00a0 Desire to maximize wealth
You are a hotel manager and you are considering four projects that yield different payoffs, depending upon whether there is an economic boom or a recession. The potential payoffs and corresponding payoffs are summarized in the following table.<\/p>\n

\u00a0
\u00a0The expected value of project A is:
\u00a0\u00a0\u00a0\u00a0 -$20
\u00a0\u00a0\u00a0\u00a0 $50
\u00a0\u00a0\u00a0\u00a0 $15
\u00a0\u00a0\u00a0\u00a0 None of the statements is correct.
Buying flood insurance decreases homeowner\u2019s incentives to install state of the art equipment that helps prevent flooding in homes. This is a(n) __________ problem.
\u00a0\u00a0\u00a0\u00a0 adverse selection
\u00a0\u00a0\u00a0\u00a0 moral hazard
\u00a0\u00a0\u00a0\u00a0 risk aversion
\u00a0\u00a0\u00a0\u00a0 none of the statements associated with this question are correct
Which of the following auction examples has a private value information structure?
\u00a0\u00a0\u00a0\u00a0 Three firms bid for an oil lease.
\u00a0\u00a0\u00a0\u00a0 An auction of a book signed by the author.
\u00a0\u00a0\u00a0\u00a0 A stadium in need of money decides to name itself after the person willing to pay the most for the privilege.
\u00a0\u00a0\u00a0\u00a0 An auction of a book signed by the author and a stadium in need of money decides to name itself after the person willing to pay the most for the privilege.<\/p>\n

The price an unregulated monopolist will likely charge is:
\u00a0\u00a0\u00a0\u00a0 above marginal cost.
\u00a0\u00a0\u00a0\u00a0 below marginal revenue.
\u00a0\u00a0\u00a0\u00a0 where marginal cost is equal to marginal revenue.
\u00a0\u00a0\u00a0\u00a0 below MR and above MC.
Which of the following statements is true in the presence of negative externalities?
\u00a0\u00a0\u00a0\u00a0 The socially efficient equilibrium is found at the intersection of MC to society and the demand curve.
\u00a0\u00a0\u00a0\u00a0 The social marginal cost curve is equal to the sum of the internal and external marginal cost curves.
\u00a0\u00a0\u00a0\u00a0 An unregulated monopoly will produce where the internal marginal cost curve intersects with the demand curve.
\u00a0\u00a0\u00a0\u00a0 All of the above statements are true
Nonrivalry and nonexclusionary are characteristics of which of the following:
\u00a0\u00a0\u00a0\u00a0 Public goods
\u00a0\u00a0\u00a0\u00a0 Antitrust policy
\u00a0\u00a0\u00a0\u00a0 Free riding
\u00a0\u00a0\u00a0\u00a0 All of the above
Which of the following pieces of legislation is aimed at curbing the negative effects of asymmetric information?
\u00a0\u00a0\u00a0\u00a0 Robison-Patman Act
\u00a0\u00a0\u00a0\u00a0 Clayton Act
\u00a0\u00a0\u00a0\u00a0 Clean Air Act
\u00a0\u00a0\u00a0\u00a0 Truth in Lending Simplification Act
A consequence of government intervention is:
\u00a0\u00a0\u00a0\u00a0 rent seeking.
\u00a0\u00a0\u00a0\u00a0 moral hazard.
\u00a0\u00a0\u00a0\u00a0 public goods.
\u00a0\u00a0\u00a0\u00a0 adverse selection.<\/p>\n

Jaynet spends $30,000 per year on painting supplies and storage space.\u00a0 She recently received two job offers from a famous marketing firm \u2013 one offer was for $110,000 per year, and the other was for $80,000.\u00a0 However, she turned both jobs down to continue a painting career. If Jaynet sells 25 paintings per year at a price of $8,000 each:<\/p>\n

a. What are her accounting profits?<\/p>\n

$ <\/p>\n

b. What are her economic profits?<\/p>\n

$ <\/p>\n

The demand curve for product X is given by QXd = 520 – 4PX.<\/p>\n

a. Find the inverse demand curve.<\/p>\n

PX =\u00a0 –\u00a0 QXd<\/p>\n

Instructions: Round your answer to the nearest penny (2 decimal places).<\/p>\n

b. How much consumer surplus do consumers receive when Px = $50?<\/p>\n

$ <\/p>\n

c. How much consumer surplus do consumers receive when Px = $30?<\/p>\n

$ <\/p>\n

d. In general, what happens to the level of consumer surplus as the price of a good falls?<\/p>\n

The level of consumer surplus\u00a0 as the price of a good falls.<\/p>\n

You are the manager of a firm that receives revenues of $40,000 per year from product X and $80,000 per year from product Y. The own price elasticity of demand for product X is -1.5, and the cross-price elasticity of demand between product Y and X is -1.8.<\/p>\n

How much will your firm’s total revenues (revenues from both products) change if you increase the price of good X by 1 percent?<\/p>\n

Instructions: Round your answer to the nearest dollar. Include a minus (-) sign if applicable.<\/p>\n

$ <\/p>\n

An economist estimated that the cost function of a single-product firm is:<\/p>\n

C(Q) = 50 + 25Q + 30Q2 + 5Q3.<\/p>\n

Based on this information, determine the following:<\/p>\n

a. The fixed cost of producing 10 units of output.<\/p>\n

$ <\/p>\n

b. The variable cost of producing 10 units of output.<\/p>\n

$ <\/p>\n

c. The total cost of producing 10 units of output.<\/p>\n

$ <\/p>\n

d. The average fixed cost of producing 10 units of output.<\/p>\n

$ <\/p>\n

e. The average variable cost of producing 10 units of output.<\/p>\n

$ <\/p>\n

f. The average total cost of producing 10 units of output.<\/p>\n

$ <\/p>\n

g. The marginal cost when Q = 10.<\/p>\n

$ <\/p>\n

Describe how a manager who derives satisfaction from both income and shirking allocates a 10-hour day between these activities when paid an annual, fixed salary of $110,000.<\/p>\n

Time spent working:\u00a0 hours
Time spent shirking:\u00a0 hours<\/p>\n

When this same manager is given an annual, fixed salary of $110,000 and 5 percent of the firm\u2019s profits\u2014amounting to a total salary of $150,000 per year\u2014the manager chooses to work 8 hours and shirks for 2 hours. Given this information, which of the compensation schemes does the manager prefer?
\u00a0\u00a0\u00a0\u00a0 The manager is indifferent between the two payment schemes.
\u00a0\u00a0\u00a0\u00a0 The scheme with fixed payment of $110,000 and a percentage of profits.
\u00a0\u00a0\u00a0\u00a0 The scheme with only a fixed payment of $110,000.
Suppose the own price elasticity of market demand for retail gasoline is -0.7, the Rothschild index is 0.3, and a typical gasoline retailer enjoys sales of $2,500,000 annually. What is the price elasticity of demand for a representative gasoline retailer\u2019s product?<\/p>\n

Instruction: Round your answer to 2 decimal places.<\/p>\n

\u00a0<\/p>\n

Last month you assumed the position of manager for a large car dealership. The distinguishing feature of this dealership is its \u201cno hassle\u201d pricing strategy; prices (usually well below the sticker price) are posted on the windows, and your sales staff has a reputation for not negotiating with customers. Last year, your company spent $4 million on advertisements to inform customers about its \u201cno hassle\u201d policy, and had overall sales revenue of $30 million. A recent study from an agency on Madison Avenue indicates that, for each 8 percent increase in TV advertising expenditures, a car dealer can expect to sell 3 percent more cars\u2014but that it would take a 2 percent decrease in price to generate the same 3 percent increase in units sold.<\/p>\n

Assuming the information from Madison Avenue is correct, should you increase or decrease your firm\u2019s level of advertising?
\u00a0\u00a0\u00a0\u00a0 The firm should increase advertising.
\u00a0\u00a0\u00a0\u00a0 The firm should decrease advertising.
\u00a0\u00a0\u00a0\u00a0 The firm should not change advertising.<\/p>\n

The manager of a local monopoly estimates that the elasticity of demand for its product is constant and equal to -3. The firm\u2019s marginal cost is constant at $15 per unit.<\/p>\n

a. Express the firm\u2019s marginal revenue as a function of its price.<\/p>\n

Instruction: Round your response to 2 decimal places.<\/p>\n

MR =\u00a0 x P<\/p>\n

b. Determine the profit-maximizing price.<\/p>\n

Instruction: Use the rounded value calculated above and round your response to 2 decimal places.<\/p>\n

$ <\/p>\n

Consider a Bertrand oligopoly consisting of four firms that produce an identical product at a marginal cost of $200. The inverse market demand for this product is P = 400 -4Q.<\/p>\n

a. Determine the equilibrium level of output in the market.<\/p>\n

\u00a0<\/p>\n

b. Determine the equilibrium market price.<\/p>\n

$ <\/p>\n

c. Determine the profits of each firm.<\/p>\n

$
Use the following normal-form game to answer the questions below.
\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0 Player 2
\u00a0\u00a0\u00a0\u00a0 Strategy\u00a0\u00a0\u00a0 C\u00a0\u00a0\u00a0 D
Player 1\u00a0\u00a0\u00a0 A\u00a0\u00a0\u00a0 70, 70\u00a0\u00a0\u00a0 110, 40
\u00a0\u00a0\u00a0 B\u00a0\u00a0\u00a0 40, 110\u00a0\u00a0\u00a0 75, 75<\/p>\n

a. Identify the one-shot Nash equilibrium.<\/p>\n

\u00a0<\/p>\n

b. Suppose the players know this game will be repeated exactly three times. Can they achieve payoffs that are better than the one-shot Nash equilibrium?<\/p>\n

\u00a0<\/p>\n

c. Suppose this game is infinitely repeated and the interest rate is 4 percent. Can the players achieve payoffs that are better than the one-shot Nash equilibrium?<\/p>\n

\u00a0<\/p>\n

d. Suppose the players do not know exactly how many times this game will be repeated, but they do know that the probability the game will end after a given play is \u03b8. If \u03b8 is sufficiently low, can players earn more than they could in the one-shot Nash equilibrium?<\/p>\n

\u00a0<\/p>\n

You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Group 1\u2019s elasticity of demand is -3, while group 2\u2019s is -4. Your marginal cost of producing the product is $20.<\/p>\n

a. Determine your optimal markups and prices under third-degree price discrimination.\u00a0 <\/p>\n

Instruction: Round your answers to two decimal places.<\/p>\n

Markup for group 1:\u00a0
Price for group 1: $ <\/p>\n

Markup for group 2:\u00a0
Price for group 2: $ <\/p>\n

b. Which of the following are necessary conditions for third-degree price discrimination to enhance profits.<\/p>\n

Instructions: You may select more than one answer. Click the box with a check mark for the correct answers and click twice to empty the box for the wrong answers. You must click to select or deselect each option in order to receive full credit.
\u00a0\u00a0\u00a0\u00a0 At least one group has elasticity of demand greater than 1 in absolute value.
\u00a0\u00a0\u00a0\u00a0 There are two different groups with different (and identifiable) elasticities of demand.
\u00a0\u00a0\u00a0\u00a0 At least one group has elasticity of demand less than one in absolute value.
\u00a0\u00a0\u00a0\u00a0 We are able to prevent resale between the groups.<\/p>\n

A risk-neutral consumer is deciding whether to purchase a homogeneous product from one of two firms. One firm produces an unreliable product and the other a reliable product. At the time of the sale, the consumer is unable to distinguish between the two firms\u2019 products. From the consumer\u2019s perspective, there is an equal chance that a given firm\u2019s product is reliable or unreliable. The maximum amount this consumer will pay for an unreliable product is $0, while she will pay $50 for a reliable product.<\/p>\n

a.\u00a0\u00a0\u00a0 Given this uncertainty, what is the most this consumer will pay to purchase one unit of this product?<\/p>\n

\u00a0\u00a0\u00a0 $
b.\u00a0\u00a0\u00a0 How much will this consumer be willing to pay for the product if the firm offering the reliable product includes a warranty that will protect the consumer?
\u00a0\u00a0\u00a0\u00a0
\u00a0\u00a0\u00a0 $ <\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The main role of economic profits is to:signal where resources are most highly valued by society\u00a0\u00a0\u00a0\u00a0 allow firms to cover their production costs\u00a0\u00a0\u00a0\u00a0 allow consumers to cover their opportunity cost\u00a0\u00a0\u00a0\u00a0 None of the statements associated with this question are correctIf the interest rate is 3 percent, the present value of $900 received at the end […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":["post-6680","post","type-post","status-publish","format-standard","hentry","category-homework-help"],"_links":{"self":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/6680","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/comments?post=6680"}],"version-history":[{"count":0,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/6680\/revisions"}],"wp:attachment":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/media?parent=6680"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/categories?post=6680"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/tags?post=6680"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}