A certain brand of vacuum cleaners can be purchased from several local stores as well as from several catalogues or websites. If all sellers charge the same price for the vacuum cleaner, will they all earn zero economic profit in the long run? Explain and include a diagram.

Suppose the demand for donuts in Bethlehem is;

P = 10 – Q where Q = qA + qB

There are only two firms that sell donuts in Bethlehem, Firm A and Firm B. Each firm has the same cost function;

TC = 2 + q

a. Determine the Cournot equilibrium.

b. Explain why the intersection of the best-response functions is the Cournot equilibrium.

1. The demand curve for the Magic 8-Ball toy is P = 15 – 0.5Q. Frances currently has a patent on the concept of predictive billiards accessories, and is thus the only person able to sell Magic 8-Balls. For now, Frances is a monopoly. Her costs are C(QF) = 2QF a. Calculate the (monopoly) market price, quantity produced, and Frances’s profit.  

b. Frances’s patent is about to expire, and another producer (Simon) is planning on entering the market. Simon has lower production costs because of his mob connections, so C(QS) = QS. However, Frances is able to produce the latest batch of Magic 8-Balls before Simon can make his, so she sets her quantity first (this is now Stackelberg competition). What quantity (QF) will she produce since she is going first? What quantity (QS) will Simon produce in response? Also calculate the market price and each firm’s profits. You don’t have to do this problem in alphabetical order: you learned how to do Cournot in part (d) first.  

c. Someone who barely paid attention in their Business Econ class suggests that Frances’s goal should be to use her market power to drive Simon out of business. If Simon is “out of business,” that means QS = 0. Use your reaction function to determine the quantity (QF) Frances would have to produce so that Simon chooses QS = 0. Calculate market price and Frances’s profit. Compare her profit now that she has kept Simon out of the industry to her profit in part (b). Should her goal be to put Simon out of business?  

d. What if Frances didn’t get to “go first” and she and Simon were in Cournot competition? Remember: demand for 8-Balls is P = 15 – 0.5Q, Frances has costs C(QF) = 2QF , and Simon has costs C(QS) = QS. Calculate QF, QS, market price, and each firm’s profit under Cournot competition.  

e. Frances notices that her profit now that she has competition is less than half of the profit when she was a monopoly (part (a)). She “happens to run into” Simon at an alligator farm and suggests that they would make more profit by colluding. She proposes that instead of competing against each other, they each produce half of the monopoly quantity (she suggests that each firm produce half of the the QF you found in part (a).) If Frances were producing this new quantity, use Simon’s reaction function to find the QS Simon will produce. Calculate the market price and Simon’s new profit and compare it to his profits in part (c) and (d).

f. What if it were Bertrand competition instead of Cournot/Stackelberg? Calculate the equilibrium price Simon would charge for Magic 8-Balls if it were Bertrand competition. Estimate his quantity produced (QS) and his profit. Use the same costs as before. Note: I said “estimate” instead of “calculate” for quantity. You should still do math, but you should also use your intuition: there is a very reasonable assumption you can use to make the math a little simpler.

g. A new producer (Erin) enters. Her costs are the same as Simon’s: C(QE) = QE. What is the new market price if these 3 producers are engaged in Bertrand competition? Tell me the profit for each of the 3 firms (Frances, Simon, and Erin.)

Explain how the number of producers in a market varies from one market structure to another with relevant examples?

In a separate file or with pencil and paper answer the question and then submit the file below.

Explain with the help of graphs how a firm minimizes costs in the long run. Answer is worth 5 points.

Which business sectors/companies may have strong growth potential and which may decline/disappear in the coming decades? Name top 3 for each question with explanations. (700 words)

Explain what determines the "optimal" amount of a public good and how this concept of optimality can change over time (as we elect new and different leaders). If you use any other sources, be sure to cite them within the text as well as provide a bibliographical citation at the end. Provide one "unique" (i.e. don't use one that a classmate has already used!) example of the free rider problem that you have seen in your lives. From this example, identify what is causing the market failure and a possible way to solve this problem.u

1. David is an experienced restaurant manager who wants to open his own restaurant (at one location only) and be the manager of it. He knows that he needs at least $100,000 to create and operate the business, and he knows that he can only raise $50,000 on his own towards the $100,000 he needs. Name for him all of the types of business organizations that exist (all of them). Tell him which two of those business organizations would likely be his best options, and tell him what the advantages and disadvantages of each of those two are. Then tell him which one of the two you would recommend that he use to operate the restaurant business, and include at least two reasons as to why you would choose that type of business organization over the other one.

How can the tools KPI, Change Impact Assessment and OCC Survey be used to measure and assess changes?

A woman weighing 240 pounds had been denied a job as an aerobics instructor by a for-profit fitness center. She sued under San Francisco law, which prohibits discrimination based on appearance, arguing that she had been leading aerobics classes for fifteen years. Was she being discriminated against because of her weight? In other words, was this pure discrimination? Or was she not hired because her potential employer felt that her weight would ensure that few or no clients would take her classes? Was this a sound commercial decision based on her likely productivity? It is impossible to decide between these two possibilities, and this is true generally in cases where the source of potential bias is consumer preferences. The same arguments can be made about discrimination against minorities or women: Businesspeople could always rationalize a refusal to hire on grounds that hiring would be bad for business. If determining the underlying cause is so difficult, in the end, we have to decide which groups to protect on political, not economic, grounds.

500 to 700 words ... essay

In your own words, consider the importance of westward expansion during the 1840s and 1850s and the California gold rush on the stability of the nation as a whole.

3. Do some Internet research to find out what it means for a company to create a “poison pill”? Why might a company do that? Some economists think poison pills should be illegal. What is their rationale?

10. If the marginal propensity to consume is 0.75 and investment spending decreases by $20 billion. Suppose all other aggregate expenditure components are autonomous, based on the Keynesian model, what will be the overall effect on GDP?

Select one:

a. GDP will decrease by $20 billion

b. GDP will increase by $15 billion

c. GDP will decrease by $80 billion

d. GDP will increase by $30 billion

e. GDP will decrease by $26.7 billion

11. One of the most serious effects of a banking panic (bank run) is that

Select one:

a. banks will not earn as much profit

b. banks will no longer be trusted by the public

c. people will not place their excess money in banking accounts

d. people may lose any accrued interest on their accounts

e. large withdrawals of cash lead to a severe decrease in reserves and ultimately in the money supply

12. Suppose that the prices of dairy products have risen relatively less than prices in general over the last several years. To which problem in the construction of the CPI is this situation most relevant?

Select one:

a. substitution bias

b. introduction of new goods

c. unmeasured quality change

d. income bias

e. None of the above

13. The demand for money

Select one:

a. is the demand for bonds

b. is the demand for loans

c. increases whenever the price level falls

d. reflects the wealth or asset allocation problem that people face

e. shows the people always demand as much money as possible

14. A rightward shift of the economy's labor supply curve would result from a(n)

Select one:

a. cut in income tax rates or an increase in welfare benefits to the needy

b. cut in income tax rates or a cut in benefits to the needy

c. increase in income tax rates or a cut in benefits to the needy

d. increase in income tax rates or an increase in benefits to the needy

e. cut in income tax rates or a freeze on benefits to the needy

15. Investment from abroad (or foreign direct investment)

Select one:

a. is a way for poor countries to learn the state-of-the-art technologies developed and used in richer countries

b. is viewed by economists as a way to increase growth

c. noften requires removing restrictions that governments have imposed on foreign ownership of domestic capital

d. All of the above are correct

e. None of the above is correct

16. Countercyclical fiscal policy has a serious problem with

Select one:

a. the timing of its enactment and impact

b. the easy reversibility of policy

c. the tendency of the central bank to immediately counter government's action

d. the courts as it has been held to be unconstitutional

e. Presidential executive orders

17. When implementing monetary policy, the variable the Federal Reserve watches most closely is the

Select one:

a. required reserve ratio

b. federal funds rate (Fed funds rate)

c. long term bond rate

d. national debt

e. short-term corporate bond rate

18. If there is a surplus of the domestic currency at a fixed exchange rate,

Select one:

a. the currency will depreciate

b. the currency will appreciate

c. the country must switch to a floating exchange rate

d. the central bank must buy up that excess supply or the domestic currency will depreciate

e. the central bank must buy up that excess supply or the domestic currency will appreciate

19. If the central bank lowered the required reserve ratio,

Select one:

a. excess reserves would decrease

b. the money supply would decrease

c. the money supply would increase

d. banks would borrow more from the central bank

e. loans would earn more interest