Explain why P=MC in the short-run equilibrium of the perfectly competitive firm, whereas in the long… More »

Evaluating Legal Prices: Collect information regarding the minimum wage. State the procedure of this… More »

In 1999 Mercedes-Benz USA adopted a new pricing policy, which it called NFP (negotiation-free proces… Show more In 1999 Mercedes-Benz USA adopted a new pricing policy, which it called NFP (negotiation-free process), that sought to eliminate price negotiations between customers and new-car dealers. An article in The New York Times (August 29, 1999) reported that a New Jersey Mercedes dealer who had his franchise revoked is suing Mercedes, claiming that he was fired for refusing to go along with Mercedes’ no-haggling pricing policy. The New Jersey dealer said he thought the NFP policy was illegal Why might Mercedes’ NFP policy be illegal? Can you offer another reason why the New Jersey dealer might not have wished to follow a no-haggling policy? • Show less

. The two largest diner chains in Kansas compete for weekday breakfast customers. The two chains, Go… Show more . The two largest diner chains in Kansas compete for weekday breakfast customers. The two chains, Golden Inn and Village Diner, each offer weekday breakfast customers a “breakfast club” membership that entitles customers to a breakfast buffet between 6: 00 A.M. and 8:30 A.M. Club Memberships are sold as “ passes” good for 20 weekday breakfast visits. Golden Inn offers a modest but tasty buffet, while Village Diner provides a wider variety of breakfast items that are also said to be quite tasty. The demand function for breakfast club memberships are QG = 5,000 – 25PG + 10PV Qv = 4,200 – 24Pv + 15G Where QG and Qv are the number of club membership sold monthly and PG and PV are the prices of club memberships, both respectively, at Golden Inn and Village Diner chains. Both diners experience long-run constant costs of production, which are PG = BRG (PV) = 125 + 0.2PV PV = BRV (PG) + 125 + 0.3125PG a. If Village Diner charges $200 for its breakfast club membership, find the demand inverse demand, and marginal revenue functions for Golden Inn. What is the profit maximizing price for Golden Inn given Village Diner charges a price of $200? Verify mathematically that this price can be obtained from the appropriate best-response curve given above. b. Find the Nash equilibrium prices for the two diners. How many breakfast club memberships will each diner sell in Nash equilibrium? How much profit will each diner make? c. How much profit would Golden Inn and Village Diner earn if they charged prices of $165 and $180? • Show less

. A firm with two factories, one in Michigan and one in Texas, has decided that it should produce a… Show more . A firm with two factories, one in Michigan and one in Texas, has decided that it should produce a total of 500 units to maximize profit. The firm is currently producing 200 units in the Michigan factory and 300 units in the Texas factory. At this allocation between plants, the last unit of output produced in Michigan added $5 to total cost, while the last unit of output produced in Texas added $3 to total cost. Is the firm maximizing profit? If the firm produces 201 units in Michigan and 299 in Texas, what will be the increase (decrease in the firm’s total cost? • Show less

If demand increases and the supply increases also, then what will happen to the new equilibrium pric… More »

What does a shift in the demand to the right mean? Why does the demand curve shift?

1. Draw the supply and demand graph for pizza, then answer the questions below. SUPPLY OF AND DE