With reference to Sweezy’s model of the kinked demand curve, explain the reasons why we might expect price to be unresponsive to small variations in cost in the case of oligopoly. What are the main limitations of the kinked demand curve model?  

b. Quote real world examples of oligopolistic firms that have benefited from a first-mover advantage.

Companies are expected to act ethically and ensure their employees are also acting ethically. However, as we know the level of ethics expected and those practiced are not always the same. Take a moment to share your thoughts on the following questions about ethics.

• Do you believe that ethics can be taught? Why or why not?
• If you were the CEO of a company how would you ensure employees operated at a high ethical standard?

1. What is order paper and what is bearer paper?

2. What are the main types of negotiable instruments?

3. What is the law merchant?

4. Who owns a corporation?

5. Who are the promoters of a corporation?

6. What does it mean to pierce the corporate veil?

1. (15 pts) (a) A country produces computers. If the pretrade domestic price for computers is $ 1500, and the world price for computers is $ 1200, will this country export or import computers?

(b) Say the US dollar appreciates against other currencies. What will happen to US exports?

(c) Say US interest rates decrease over Japanese interest rates. Will the US dollar appreciate or depreciate against the Japanese yen?

(d) Say the US economic growth rate increases over the Canadian economic growth rate. Will the US dollar appreciate or depreciate against the Canadian dollar?

(e) Country A has a Gini coefficient of 0.500, while country B has a Gini coefficient of 0.400. Which country has the more unequal income distribution?

What you think a historian's job is, what skills a historian needs to do that job, and how those skills might be applicable to your career and/or major goals.

Which of the following is not a significant difference between a monopolist and a competitive firm:

The monopolist produces where MR=MC while the perfect competitor does not.

A monopoly is a price-maker, whereas a competitive firm is a price-taker

A monopolist is protected by barriers to entry, whereas a competitive firm is not

The monopoly’s MR curve lies below the demand curve, whereas the competitive firm’s MR curve is horizontal at the market price

HOW STARBUCKS USES PRICING

STRATEGY FOR PROFIT

MAXIMIZATION

Value Based Pricing Can Boost Margins

For the most part, Starbucks is a master of employing value based pricing to maximize profits, and they use research and customer analysis to formulate targeted price increases that capture the greatest amount consumers are willing to pay without driving them off. Profit maximization is the process by which a company determines the price and product output level that generates the most profit. While that may seem obvious to anyone involved in running a business, it’s rare to see companies using a value based pricing approach to effectively uncover the maximum amount a customer base is willing to spend on their products. As such, let’s take a look at how Starbucks introduces price hikes and see how you can use their approach to generate higher profits.

An Overview of the Starbucks Pricing

Strategy:

The Right Customers and the Right Market

While cutting prices is widely accepted as the best way to keep customers during tough times, the practice is rarely based on a deeper analysis or testing of an actual customer base. In Starbucks’ case, price increases throughout the company’s history have already deterred the most price sensitive customers, leaving a loyal, higher-income consumer base that perceives these coffee beverages as an affordable luxury. In order to compensate for the customers lost to cheaper alternatives like Dunkin Donuts, Starbucks raises prices to maximize profits from these price insensitive customers who now depend on their strong gourmet coffee.

Rather than trying to compete with cheaper chains like Dunkin, Starbucks uses price hikes to separate itself from the pack and reinforce the premium image of their brand and products. Since their loyal following isn’t especially price sensitive, Starbucks coffee maintains a fairly inelastic demand curve, and a small price increase can have a huge positive impact on their margins without decreasing demand for beverages. In addition, only certain regions are targeted for each price increase, and prices vary across the U.S. depending on the current markets in those areas (the most recent hike affects the Northeast and Sunbelt regions, but Florida and California prices remain the same).

Product Versioning & Price Communication

They also apply price increases to specific drinks and sizes rather than the whole lot. By raising the price of the tall size brewed coffee exclusively, Starbucks is able to capture consumer surplus from the customers who find more value in upgrading to Grande after witnessing the price of a small drip with tax climb over the $2 mark. By versioning the product in this way, the company can enjoy a slightly higher margin from these customers who were persuaded by the price hike to purchase larger sizes.

Starbucks also expertly communicates their price increases to manipulate consumer perception. The price hike might be based on an analysis of the customer’s willingness to pay, but they associate the increase with what appears to be a fair reason. Using increased commodity costs to justify the price as well as statements that aim to make the hike look insignificant (less than a third of beverages will be affected, for example) help foster an attitude of acceptance.

on Wednesday April 8, Starbucks announced that it expects its fiscal second-quarter earnings to be cut nearly in half as the coronavirus pandemic causes sales to plunge in its two largest markets.

Assume two neighbors who live next to a pond. Both neighbors get together to determine how each of them value a large deck overseeing the pond. After some economic analysis, they arrive at the following demand estimates: Qa = 160 − 20Pa , Qb = 60 − 5Pb where Q is the size of the deck to be built and P is the price of inputs and labor.

a) Based on these estimates, determine the market demand (assuming these are the only two households living next to the pond) for this public good, the deck overlooking the pond. Draw three graphs on the top of each other -first graph for A’s demand, a second graph for B’s demand, and the third graph for the market demand.

b) Explain the shape of the demand curve. Determine the willingness to pay when the size of the pond is 60 square feet.

c) If the market supply for pond decks were P= 6 + 0.15Q, what would be the optimal provision of this public good, that is what would the size of the pond?

d) Which neighbor is more likely to build the pond? Explain your answer.

New Cities
A regional economy has 11 million workers and an urban utility curve u(n)=15+12n-n^2, where n is the number if workers in millions. Initially, all 11 million workers are in a single city.

a) Suppose the regional government establishes a new city with 1 million workers, leaving 10 million workers in the old City. Predict the new equilibrium distribution of population between the two cities. Illustrate.
b) Suppose the regional government provides a subsidy to the residents of the new city. The subsidy (in utils) is s=12-2n, that is, 10 utils in a city with 1 million workers, 8 utils for 2 million workers, and so on. Predict the new equilibrium distribution of population between the two cities. Illustrate.

A society has 2 goods, A and B, for two people, Larry and Javier. The price of A and B are PA = $4 and PB = $10. Larry’s utility function is UL(A, B) = 40X0.25B0.5 and income is YL = $600. Javier’s utility function is UJ(A, B) = A0.5B0.5 and income is YJ = $2,400. Marginal utilities for Larry and Xavier are:

Larry: MUA = 10A-0.75B0.5 and MUB = 20A0.25B-0.5

Xavier: MUA = 0.5A-0.5B0.50 and MUB = 0.5A0.5B-0.5

1. Find the utility maximizing consumption choices of A and B for Larry and Javier.  Explain your work.
2. Currently in this economy, there are 300 units of good A supplied and 200 units of good B supplied.  Given the consumption demands for A and B above, is this economy in a competitive equilibrium?  If so, explain why.  If not, explain how prices and outputs will adjust to move toward an equilibrium.
3. Draw the situation described in parts a and b in an Edgeworth Box.

what were the root causes to either market failure or government failure or both for India 1991-1997

Project 2

This project has three components:

Analyse Canada’s nominal and real GDP for last 5 years with the help of a table/bar chart/Graph.

Prepare a one-page analysis on the indicators reflecting economy’s well being.

Does the following statement give you a true picture of the situation: “Real GDP in the United States is higher than real GDP in Canada. Therefore, the standard of living in the United States must be higher than that in Canada.” Why? Why not?

How can you predict industry changes using supply and demand? Elaborate. What are the sources of Economic Profit? Looking for some original content.