A.How will bargaining over markups work between them? B. Will they agree to a maximum retail price (maximum vertical price fixing) or a minimum retail price (RPM), or neither, or both? Does the contract increase or decrease output compared to the manufacturer choosing the wholesale price w, the retailer buying whatever it chooses and freely choosing a retail price p? Compare on a graph. C.How does the retail price in part B compare with the monopoly price if the manufacturer and retailer vertically integrated?

A.How will bargaining over markups work between them? B. Will they agree to a maximum retail price (maximum vertical price fixing) or a minimum retail price (RPM), or neither, or both? Does the contract increase or decrease output compared to the manufacturer choosing the wholesale price w, the retailer buying whatever it chooses and freely choosing a retail price p? Compare on a graph. C.How does the retail price in part B compare with the monopoly price if the manufacturer and retailer vertically integrated?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter13: best-practice Tactics: Game Theory

Section: Chapter Questions

Problem 1E

See similar textbooks

Similar questions

2. Acme Pharmaceutical Company discovers a vaccine that prevents the common cold and has a patent that grants it a monopoly on this drug. Acme has plants in both the North America and Europe and can manufacture the drug on either continent at a marginal cost of $10. Assume there are no fixed costs. In Europe, the demand for the drug is QE = 70 - PE, where QE is the quantity demanded when the price in Europe is PE. In North America the demand for the drug is QN = 110 - PN, where QN is the quantity demanded when the price in North America is PN (a) Determine the aggregate demand function for the combined mar- ket. Determine the inverse demand function for the combined market and the inverse demand functions for each of the two mar- kets separately. (b) To begin, assume that it is illegal for the firm to price discriminate, so that it can charge only a single price P on both continents. What price will it charge, and what profits will it earn?
A company is offering Product X, a new generation media device, in a foreign market for the first time. The company's CEO favors the adoption of a pricing strategy that adds a 30 percent markup to costs. However, the company's CFO believes that the firm should charge lower prices similar to what they charge in the domestic market. Which of the following, if true, would strengthen the CEO's argument? O A. The company's fierce competitor in the home market has already entered the foreign market with a comparable product. O B. The company's fierce competitor in the home market has already entered the foreign market with a comparable product. Oc. Consumers in the foreign market are characterized by relatively lower purchasing power. O D. Consumers in the foreign markets are known to be loyal to domestic brands. O E. With the introduction of Product X, consumers in the foreign market will be exposed to a whole new product category.
Ref to the right-hand side graph to answer Q49 – Q50b. Price АТС 49. Suppose the monopolist represented in the diagram above produces positive output. (In other words, "no shutdown" and keep operating.) What is the price charged at the profit-maximizing/loss- minimizing output level? and cost per unit MC $75 68 63 A) $38 B) $54 C) $63 D) $68 E) $75 54 50. The monopolist profit (or loss) = $_ Note: Put “–" (minus) sign if the monopolist is losing money. 38 'Demand 50b. On the right-hand side graph, neatly shade a rectangle or triangle area that represents this monopolist's profit (or loss). 630 800 Quantity 880 850 MR
Assume Tea brands A and B are competing brands in the market. With arrival of winter season, A announces good promotional deals. Using ‘Comparative Statics Analysis’ of demand and supply model: How will the managements of the two brands study the short-run and long-run impact on Tea Sales, after the announcement of promotions in the market of Tea? Demonstrate and explain, with clearly labelled two panel diagrams, the ‘Rationing Function’ and the Allocating or ‘Guiding Function’ of Price.
Seafood Salt Company wishes to third degree price discriminate to meet competition in two markets A and B. The firm’s total cost schedule is TC = 300 + $2*QA + $2*QB. Demands in the two markets are QA = 120-10*PA and QB = 120 – 20*PB. The profit-maximizing prices to charge in markets A and B are PA = _____ and PB = _____. A. 6; 5. B. 8; 5. C. 7; 4. D. 5; 8. E. None of the above.
Problem 3 Squeak eClean produces commercial sanitizer used to clean tanker trucks that haul liquid food products such as milk. This sanitizer a commodity like any other and at the wholesale level, there are many domestic and foreign producers that compete vigorously. Suppose you have the following estimated market demand and supply functions for the sanitizer. Qd=248.08 +2.2Y – 0.6Pc+ 1.2 Ps − 4P Qs = 10 +2P In these equations, Q measures output in gallons per month (in 1,000's), P is the price per gallon of the sanitizer, Y is annual average household income (in 1,000's), Pc is an index of commodity prices, and Ps is the average price per gallon of other types of sanitizer. After gathering the latest data, you find that average household income is $36,400, the current level of the commodity price index is 110.6, and the average price per gallon of other types of sanitizers is $48.50. a. Find the current equilibrium price and quantity in this market. b. Find the equilibrium price and…
You are the manager of a monopoly, and your analysts have estimated your demand and cost functionsas P = 300 − 3Q and C(Q) = 2, 000 + 2Q2, respectively.(a) What price-quantity combination maximizes your firm’s profits?(b) Calculate the maximum profits.(c) Is demand elastic, inelastic, or unit elastic at the profit maximizing price-quantity combination?(d) What price-quantity combination maximizes revenue?(e) Calculate the maximum revenues.(f) Is demand elastic, inelastic, or unit elastic at the revenue maximizing price-quantity combination?
A monopoly produces a good with a network externality at a constant marginal and average cost of c-$2. In the first period, its inverse demand curve is ← p10-10 in the second period, its inverse demand curve is p-10-10 unless it sels at least Q 8 units in the first period. If it meets or exceeds this target, then the demand curve rotates out by a (t sells a times as many units for any given price), so that its inverse demand curve is The monopoly knows that it can sell no output after the second period. The monopoly's objective is to maximize the sum of its profits over the two periods. For what values of it would the monopoly earn a higher two-period profit by setting a lower price in the first period? Ifa is greater than (round your answer to two decimal places)
Post-merger T-Mobile/Sprint is developing new data plans targeted to certain regions of the country. Using billing records for customers in the west coast (CA-OR-WA) region, the priong team has determined that typical data usage can be estimated with the following demand: Q 1600-100P (where P is in cents per MB; and Q is in MB) And the pricing team has proposed the following charges: First 400 MB @ 5¢ Next 200 MB @ 3¢ Remaining MB @ 14 What will be the consumer surplus generated by the typical west coast customer, given this pricing schedule, if the customer uses marginal decision-making? If west coast consumers choose quantity based on the average price per MB, will quantity increase or decrease relative to marginal decision making? a) CS with marginal decision making: $92.50; using average price leads to consuming less than the optimal amount.
2. Acme Pharmaceutical Company discovers a vaccine that prevents the common cold and has a patent that grants it a monopoly on this drug. Acme has plants in both the North America and Europe and can manufacture the drug on either continent at a marginal cost of $10. Assume there are no fixed costs. In Europe, the demand for the drug is QE = 70 - PE, where QE is the quantity demanded when the price in Europe is PE. In North America the demand for the drug is QN 110 PN, where QN is the quantity demanded when the price in North America is PN =
A monopolist book publisher with a constant marginal cost of 2 and no fixed costs sells novels in only two countries. Assume the inverse demand curve in country 1 is given by P1=10-2/3Qand the inverse demand curve in country 2 is given byPW=18-QAssuming book shipments across countries are banned so that price discrimination occurs. What is the equilibrium price and quantity of books sold by the monopolist in country 1?Options are: a)p=1, q=16b) p=1 q=12c) p=4, q=8d)p=6, q=6Continuing to assume price discrimination, what is the equilibrium price and quantity of books sold by the monopolist in country 2?a)p= 4,q=14b)p= 6,q=12c)p= 8,q=10d)p= 10,q=8If book imports are permitted in both countries so that price discrimination is impossible, what is the equilibrium price and quantity sold in the two countries combined?a)p=6,q=20b)p=7,q=20c)p=10,q=8d)p=12,q=6
1) A customer's "Willingness to Pay" should always be below the price that is being charged by the firm in the industry. a) True b) False c) Depends d) Doesn't matter 2) We find that the margins of Microsoft and Intel are higher compared to the PC manufacturers, we find that that Apple takes a very high margin on sale of mobile application by individual developers for the iOS platform. What are the underlying forces in these two scenario respectively? a) Complementor and Substitute b) Supplier and Complementor c) Competitor and Supplier d) Substitute and Competitor