Exhibit 25-3

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Refer to Exhibit 25-3. The four-firm concentration ratio for this industry is

Refer to Exhibit 25-3. The Herfindahl Index for this industry is currently

Refer to Exhibit 25-3. The Justice Department would consider this industry to be

Assume there are two firms in two different industries. The marginal cost of the first firm is $30, and its price is $38. The marginal cost of the second firm is $22, and its price is $26. Calculate first the Lerner Index for each firm. Then use it to calculate the markup factor for each firm. Which firm has a higher markup factor over marginal cost?

Please explain your answer

Describe the effects of a monopolist choosing to discriminate between two markets (assume a starting condition of equal prices in both markets). Is it always possible to profit from this kind of discrimination? Does elasticity matter? How should quantities be adjusted?

Answer the following questions about monopolists.

1. What are the three reasons why monopolies arise? Give one example of a firm that is a monopoly and the reason why it is a monopoly.

2. How does a monopolist determine its profit-maximizing level of output? How does it determine the price that it charges?

One of the goals of the Affordable Care Act (ACA) was to increase insurance coverage through a variety of policies. The ACA was largely successful in reducing the number of uninsured in the US. How would this affect the demand for medical care? Would healthcare consumption increase or decrease? Would we expect this to increase or decrease the price of care? Explain why, theoretically, it is ambiguous that increased insurance coverage could increase or decrease health.

Suppose Boston wants to reduce childhood obesity. As part of its plan, the city would impose a tax on sugary drinks like soda, Gatorade, etc because their consumption has been associated with childhood obesity, however, the tax would be applied statewide. The tax would be paid by suppliers. According to standard economic theory, how would the tax affect the market equilibrium price and quantity of soda sold in Boston? Do you think the tax would be effective in reducing childhood soda consumption in Boston? Would it be effective in reducing childhood obesity in Boston (assume that soda consumption does increase obesity)? Explain.

How much must be deposited in an account to have annual withdrawals of $ 2607 forever? Interest is compounded quarterly and the interest rate is 9% for the first 13 years and 15 % thereafter.

The answer is close to

   PX = $9500   PY = $10000   I = $15000   A = $170000   W = 160
This function is:
       Qs = 89830 -40PS +20PX +15PY +2I +.001A +10W

1. Use the above to calculate the arc price elasticity of demand between PS = $8000 and PS = $7000. The arc elasticity formula is:
Ep= Q/P8 * P1+P1/Q1+Q2
  
2. Calculate the quantity demanded at each of the above prices and revenue that will result if the quantity is sold (fill in table below).  
PS     QS   Revenue
$8000      
$7000      

3.   Marketing suggests lowering the price PS from $8000 to $7000. The size of the elasticity coefficient in #1 should tell you what is likely to happen to revenue. Explain why this is (or is not) a good marketing suggestion from a revenue viewpoint (note: your answer in #1 and the calculations in #2 should be giving the same message). If the implications in #1 and #2 differ, does the difference make sense (or did you make a mistake in #1 or #2)?

4.   Calculate the point price elasticity of demand for Smooth Sailing boats at PS = $8000 (which should make QS = 141600). Does this elasticity value indicate that demand for Smooth Sailing boats is relatively elastic? Explain why or why not. The formula is:
Qs/Px *Ps/Qs

5.   Calculate the point cross-price elasticity of demand between Qs and Px with Px = $9500. Use Qs corresponding to Ps = 8000. Other variables and their values are as given at the top, before question #1. Does this elasticity indicate that the demand for Smooth Sailing’s boats is relatively responsive to changes in Px? Explain why or why not. The formula is:

Esx= QS/Px*Px/Qs

6. Calculate the point cross-price elasticity of demand between QS and Py, given that Py = 10000 and that PS = $7500 (thus QS should equal 161,600). Other variables are as given at the top before #1. Does this elasticity indicate that the demand for Smooth Sailing boats is relatively responsive to changes in Py? Explain why or why not. The formula is:
Esy= Qs/Py *Py/Qs

Using applicable models, do a critical analysis of permanent income hypothesis and random walk models and the difference between the two model

1. The long-run cost function for LeAnn's telecommunication firm is: C(q)=0.03q². A local telecommunication tax of $0.01 has been implemented for each unit LeAnn sells. This implies the marginal cost function becomes: MC(q,t)=0.06q+t
   1. If LeAnn can sell all the units she produces at the market price of $0.70, calculate LeAnn's optimal output before and after the tax.
   2. What effect did the tax have on LeAnn's output level?
   3. How did LeAnn's profits change?

3. One

1. One of the basic principles of classical growth theory is that over time, levels of economic activity should converge in most countries and that we would enjoy equal levels of prosperity. While we view some evidence of convergence, we also observe the continuation of stark and deep levels of global inequality

1. In one small paragraph, use our production function analysis to explain why we might predict economic convergence.
2. In an additional paragraph, use our production function analysis to explain why we might not be experiencing convergence.
3. What country are you a citizen of (UNITED STATES)? Use the growth theory you have used in your previous answer to explain whether you are part of a country that is either:

1. Catching up to advanced capitalist countries,

2. Being caught up to by more rapidly growing countries, or

3. Still experiencing a big gap in living standards with no immediate prospects of catching up.

Briefly explain why the country you are a citizen of falls into the category you have chosen.

Why did Latin American countries in the latter half of the 19th century enter “neocolonial,” economically dependent relationships with European powers?