Of the following laws, which one does not regulate market structures?

Compare the elasticity of a monopolistic competitor’s demand with that of a pure competitor and a pure monopolist. Assuming identical long-run costs, compare the prices and outputs that would result in the long run under pure competition and under monopolistic competition. Contrast the two market structures in terms of productive and allocative efficiency. Explain: “Monopolistically competitive industries are populated by too many firms, each of which produces too little.”

Suppose that the U.S. government reduces the tariff on imported coffee, and a reputable study is published indicating that coffee drinkers have lower rates of colon cancer. What will the combined impact be on the equilibrium price and quantity of coffee? Explain your reasoning and show graphically the impact of these effects.

I sent the work I had to my professor, and he sent back this question: Keep in mind that in the short run assets are fixed. What impact does this have on supply?

This is the work I have so far, but I feel like I'm missing something due to the question he sent me (note: he won't help me more than that): Reasoning: If the tariff on imported coffee reduces, more coffee will be bought (and thus, more coffee is imported) by companies in order to gain a bigger profit; therefore, supply will shift to the right (most likely, supply would increase more than demand because of the reduced tariff + bigger profit companies can make) . Companies can sell the coffee at the same price since they did not have to pay as large a tariff to import it. Lower import cost with unchanged prices will make for a bigger profit. These are both proven by “more product will be bought the lower its price”. In addition, people will demand and buy more coffee when they see that a reputable study says coffee drinkers are at less risk for colon cancer. This shifts demand and moves the quantity equilibrium.

The orange and blue lines show the supply and demand of the coffee before the tariff is reduced. The thinner orange and blue lines (S1 and D1) show supply and demand after the tariff is reduced. Dashed lines show equilibrium between price and quantity. Q0 and P0 show the equilibrium before tariff is reduced. Q1 and P1 show the equilibrium after tariff is reduced. The end result is supply and demand both go through an increase (demand and supply move to the right), the price stays steady, and the quantity demanded equilibrium changes.

You work for a firm that is currently selling a generic allergy medication. Recently there was a new price control set in place which is currently slightly higher than the current market price. What events could occur which would cause the price ceiling to become binding? Give an example of a decision your company can make to get the equilibrium price back under the price ceiling.

What are the opportunity costs of developing wind farms to generate “clean” electricity? Should we make the investment?

1. Create a descriptive statistics table for our variables in word for submission (simply export from excel and cleaning it up a bit)

2. Create a table showing the variable names, coefficients, and p-values, indicating which variables are statistically significant for submission (export from excel and clean up a bit)

3. Write out the regression equation for sales here based on excel output:

4. Interpret the coefficient on our own price here:

5. If a manager increases our price by $2 then what is the predicted impact on sales?

Imagine the New Zealand economy is initially at the potential level of output, but that due to a decrease in house prices, the level of consumption within the economy falls (because consumer confidence decreased).

(a) Show what effect this has on the New Zealand economy in the context of an AD-AS diagram.

(i) Label the original long-run equilibrium point "A". Label the short-run equilibrium outcome of the decrease in house prices "B"

(ii) Briefly explain what happens to output and the inflation rate.

(b) Explain and show on your diagram in part (a) what would happen to output and the inflation rate in the long-run if the government does nothing to accommodate this shock. Label this long-run outcome "C".

(c) If the government accommodates this shock, what policies would return the economy to the potential level of output? Explain how these would work, and make sure you also explain what happens to output and the inflation rate.

Which of the following statements is (are) correct?
(x) A choice by Molly to buy more muffins at $2 per muffin than at the price of $3 per muffin is an example of
the law of demand and it is illustrated as a movement along Molly’s demand curve for muffins.
(y) A choice by Albert to buy more Tony’s pizza because of a recent increase in the price of Polly’s pizza is
illustrated as a shift to the right of Albert’s demand curve for Tony’s pizza and reflects an increase in
demand for Tony’s pizza.
(z) If George has a change in behavior and is now willing to buy less apple pie at every price, then his
demand curve for apple pie will shift to the left.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (y) only

Which of the following statements is (are) correct?
(x) Assume pizza and soda are complements. If the price of pizza decreases, then both the demand for soda
will increase and the demand curve for pizza will shift to the right.
(y) Assume Lipton green tea and Arizona green tea are close substitutes. If the price of Lipton tea decreases,
then the quantity demanded of Lipton tea will increase and the demand for Arizona tea will decrease.
(z) Assume Hershey chocolate bars and Mars chocolate bars are substitutes. If the price of Hershey chocolate
bars decreases, then the demand curve for Mars chocolate bars will shift to the left.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (y) only

Which of the following is NOT a determinant of demand?
A. the expected price of the good next month
B. the price of a resource that is used to produce the good
C. the price of a complementary good
D. the price of a substitute good
E. A and B, only

Discuss how x-inefficiencies arise and how they explain why the measure of the deadweight loss of a monopoly (i.e., Harberger’s) may be too low? Include a graph in your answer that shows the increase in deadweight welfare loss due to x-inefficiencies.

Consider a monopolist with a linear demand curve: q = a − bp, where a;b > 0. It produces at constant marginal cost c and has no fixed cost. Assume that 0 < c < a b.
(a) Find the monopoly price, quantity, and profits. (b) Derive the inverse demand curve P(q). Draw P(q), the MRcurve, and the MC-curve in a diagram. Explain why we need the assumption c < a b. (c) Does it matter that the monopolist sets price instead of quantity? (d) Calculate the deadweight loss of monopoly. (e) A change in b results in two opposing effects on the deadweight loss. Calculate the effect of a change in b on the deadweight loss. (f) Derive the price elasticity of demand η for any price. How does η change with p? (g) Show mathematically as well as graphically that the price elasticity of demand η > 1 at the monopoly price.

Corporate Finance I

What are some implicit assumptions that are made when valuing a firm using multiples based on comparable firms?