You manage a company that competes in an industry that is comprised of 3 equal-sized firms that produce similar products. A recent industry report indicates that the market is fairly saturated, in that a 10 percent industry-wide price increase would lead to a 22 percent decline in units sold by all firms in the industry. Currently, Congress is considering legislation that would impose a tariff on a key input used by the industry. Your best estimate is that, if the legislation passes, your marginal cost will increase by 1 dollar. Based on this information, what price increase would you recommend if the tariff legislation is passed by Congress? Instructions: Enter your response rounded to the nearest penny (two decimal places).

You manage a company that competes in an industry that is comprised of 3 equal-sized firms that produce similar products. A recent industry report indicates that the market is fairly saturated, in that a 10 percent industry-wide price increase would lead to a 22 percent decline in units sold by all firms in the industry. Currently, Congress is considering legislation that would impose a tariff on a key input used by the industry. Your best estimate is that, if the legislation passes, your marginal cost will increase by 1 dollar. Based on this information, what price increase would you recommend if the tariff legislation is passed by Congress? Instructions: Enter your response rounded to the nearest penny (two decimal places).

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

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You manage a company that competes in an industry that is comprised of four equal-sized firms that produce similar products. A recent industry report indicates that the market is fairly saturated, in that a 10 percent industry-wide price increase would lead to a 18 percent decline in units sold by all firms in the industry. Currently, Congress is considering legislation that would impose a tariff on a key input used by the industry. Your best estimate is that, if the legislation passes, your marginal cost will increase by two dollars.Based on this information, what price increase would you recommend if the tariff legislation is passed by Congress?Instruction: Enter your response rounded to the nearest penny (two decimal places).$
You manage a company that competes in an industry that is comprised of four equalsized firms that produce similar products. A recent industry report indicates that the market is fairly saturated, in that a 10 percent industrywide price increase would lead to an 18 percent decline in units sold by all firms in the industry. Currently, Congress is considering legislation that would impose a tariff on a key input used by the industry. Your best estimate is that, if the legislation passes, your marginal cost will increase by $2. Based on this information, what price increase would you recommend if the tariff legislation is passed by Congress? Explain
You manage a company that competes in an industry that is comprised of fiveequal-sized firms that produce similar products. A recent industry report indicates that the market is fairly saturated, in that a 10 percent industrywide priceincrease would lead to a 22 percent decline in units sold by all firms in theindustry. Currently, Congress is considering legislation that would impose atariff on a key input used by the industry. Your best estimate is that, if the legislation passes, your marginal cost will increase by one dollar. Based on thisinformation, what price increase would you recommend if the tariff legislationis passed by Congress? Explain.
You are the country manager of a firm that produces and markets a generic type of soft drink in a competitive market in Ghana. In addition to the large number of generic products in your market, you also compete against major brands such as Coca-Cola and Pepsi. Suppose that, due to the successful lobbying efforts of sugar producers in Ghana, Parliament levies a ȼ1.20 per pound tariff on all imported raw sugar: the primary input for your product. In addition, Coke and Pepsi launches an aggressive advertising campaign designed to persuade consumers that their branded products are superior to generic soft drinks. How will these events impact the market outcomes of generic soft drinks if effect of the tariff is larger the effect of advertising of Coke and Pepsi on the generic type of soft drink?
You are the country manager of a firm that produces and markets a generic type of soft drink in a competitive market in Ghana. In addition to the large number of generic products in your market, you also compete against major brands such as Coca-Cola and Pepsi. Suppose that, due to the successful lobbying efforts of sugar producers in Ghana, Parliament levies a ȼ1.20 per pound tariff on all imported raw sugar: the primary input for your product. In addition, Coke and Pepsi launches an aggressive advertising campaign designed to persuade consumers that their branded products are superior to generic soft drinks. How will these events impact the market outcomes of generic soft drinks if effect of the tariff is larger the effect of advertising of Coke and Pepsi on the generic type of soft drink? [Explain with an appropriate graph]
Colombia and Brazil are two of the major suppliers of coffee globally, each accounting for the production of roughly 30 percent of all coffee consumed. Suppose that Colombia and Brazil both have the same marginal cost, MCC=20 + 120qc and MCB=20 + 120qB. There are also many smaller coffee producing nations that operate competitively. Suppose that after substracting supply of these smaller nations from global demand, the remaining demand is P= 720-20Q which implies that MR=720-4OQ :Determine the optimal quantity of coffee that Columbia and Brazil should each produce and the global market price they should establish if they collude (you can think of the price being for a 100 kilogram bag of raw coffee beans).
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Figure 14-2 Xenophone (X Decleion Offer Cable or DSL a service Cable OSL Gigom (0) Decision 图 Offer Cable or DSL service Gigsom (G) Decon Ofer Cable or D Went service Cable DS Cable DSL X 80 million G: 19 milion X: 54 milion G: $45 milion x 55 million G: 16.5 milion X: 50 milion $7 The government of a developing country plans to award two firms, Gigacom and Xenophone, the exclusive rights to share the market for high speed internet service. Gigacom and Xenophone can both provide the service either via television cable lines or via direct subscriber line (DSL). Suppose the government is considering a proposal to delay one firm's entry into the market on the grounds that it wants to prevent "harmful" competition. Figure 14-2 shows the decision tree for this game. Refer to Figure 14-2. Now suppose that the government delays Xenophone's entry and Gigacom moves first, what is the likely outcome in the market? Both offer internet service via cable line: Xenophone earns a profit of $6 million…
Suppose the European Union (EU) is investigating a proposed merger between two of the largest distillers of premium Scotch liquor. Based on some economists’ definition of the relevant market, the two firms proposing to merge enjoyed a combined market share of about two-thirds, while another firm essentially controlled the remaining share of the market. Additionally, suppose that the (wholesale) market elasticity of demand for Scotch liquor is –1.3 and that it costs $16.20 to produce and distribute each liter of Scotch. Based only on these data, provide quantitative estimates of the likely pre- and postmerger prices in the wholesale market for premium Scotch liquor. In light of your estimates, are you surprised that the EU might raise concerns about potential anticompetitive effects of the proposed merger? Explain carefully.
Assume that the countries of Irun and Urun are the only two producers of crude oil. Further assume that both countries have entered into an agreement to maintain certain production levels in order to maximize profits. In the world market for oil, the demand curve is downward sloping. Refer to Scenario 16-1. The fact that both countries have colluded to earn higher profit shows their desire to keep production levels above the monopoly level of output. below the Nash equilibrium level of output. equal to the Nash equilibrium level of output above the Nash equilibrium level of output.
Problem 2: Presently, APlus Transport and Big Movers are the only suppliers of services that haul heavy construction equipment between jobs within the Midwest. No other suppliers have the equipment necessary to perform the service. The market inverse demand for these hauling services is given below. P = 4,030-4Q where P is price per trip and Q is total number of trips per year. For simplicity, also assume that neither firm has fixed costs. From company records, you are given the following variable cost function for each firm: a. C. TVC = 300 TVCB = 80QB b. Calculate the Cournot market equilibrium price-output solutions for each firm including their respective profits. d. Assume these two competitors operate as a two-firm Cournot duopoly. Find the reaction functions for each firm. Suppose Big Movers shuts down operations so that APlus now has a monopoly in this market. What is the price, quantity, and profits for APlus after this change? Summarize the results of your findings over the…