2) Two types of customers make up the market for Armoyas. There are 100 type A customers, each of whom is willing to pay up to $10 for an Armoya. There are 50 type B customers, each willing to pay up to $8 for an Armoya. No customer wishes to buy more than a single Armoya. The monopolist cannot differentiate between the types of customer. The average and marginal cost of production is constant at $6/Armoya.

a) What is the selling price of the good, and how much profit does the monopolist make?

b) The monopolist is offered the opportunity to advertise Armoyas at a cost of $80. The advertisement is predicted to attract another 100 type B customers. Will the advertisement be placed? What is the selling price of the good, and how much profit does the monopolist make?

c) Suppose the advertisement attracts no new customers, but raises the price all existing customers are willing to pay by $1. Will the advertisement be placed? What is the selling price of the good, and how much profit does the monopolist make?

Suppose that the annual market demand for Bleebs is given by Q=3750-75P The average and marginal costs of producing Bleebs are $10/bleeb.

A) If the firm acts as a single-price monopoly, what are the monopoly quantity, price, and profit?

B) Suppose that there are three hundred identical customers in this market. What is the best two-part tariff that the monopolist can use? If the monopolist implements the two-part tariff, how much profit will it make?

C) It turns out that the monopolist was wrong about the makeup of the customers. At any price, 1/3 of the customers buy twice as much as the other two thirds. If the monopolist implements the two-part tariff in part b, how much profit will it make?

1-If two countries choose to fix the exchange rates among their currencies, then Select one: A. the country with a current account surplus can decrease its money supply to delay the need for intervention. B. the country with a lower rate of inflation will eventually have large current account surpluses. C. both countries will have an inflation rate of zero. D. there usually is more pressure on the government whose country has an overall payments surplus than on the government whose country has an overall payments deficit.

2-The strongest argument in favor of fixed exchange rates is Select one: A. that floating exchange rates are often very volatile, disrupting international trade. B. that a fixed exchange rate allows unrestricted flow of financial capital from and into a country. C. the ease of defending fixed exchange rates during speculative attacks. D. the country's ability to use independent monetary policy to pursue internal balance.

3-Monetary policy is most effective in influencing aggregate demand Select one: A. when there is low capital mobility. B. under a freely floating exchange-rate system. C. under a fixed exchange-rate system without sterilization. D. under a fixed exchange-rate system with sterilization.

4-Fiscal policy is most effective in influencing aggregate demand Select one: A. under a floating exchange-rate system with a low degree of capital mobility. B. under a fixed exchange-rate system without sterilization. C. under a fixed exchange-rate system with sterilization. D. under a floating exchange-rate system with a high degree of capital mobility.

5-A domestic monetary shock is least disruptive Select one: A. under both fixed and floating exchange rates. B. under a floating exchange-rate system. C. under a fixed exchange-rate system without sterilization. D. under a fixed exchange-rate system with sterilization.

6-A domestic spending shock is likely to be least disruptive under a Select one: A. floating exchange-rate system when there is low capital mobility. B. fixed exchange-rate system without sterilization. C. floating exchange-rate system when there is high capital mobility. D. fixed exchange-rate system when there is high capital mobility.

Switzerland, a country with a special status outside the EU, banned the imports of agricultural products linked with the usage of specific pesticides and implemented restrictive policies for crops derived from agricultural productions that use any kind of chemical and natural product, which is not related to the protection of the environment, food safety or health. a) Explain the factors that have brought Switzerland to implement such restrictions, commenting on this trade policy approach. (10 points) b) Now suppose that Switzerland gives its agricultural industry an unfair advantage through underpriced loans and other export subsidies. These policies have disadvantaged the neighboring European countries and contributed to the excess supply of Swiss agricultural products in the EU. 1) Explain the economic consequences of the Swiss export subsidy for the domestic price in Switzerland, for Swiss consumers, for Swiss producers, for the Swiss government, and for the Swiss economy overall, as well as for the number of goods exported, consumed, and produced, considering also the possibility to include graphical evidence of your statements. (6 points) 2) What is the possible reaction from the side of WTO and/or EU? (9 points)

How would you use the Consumption-CAPM to explain the small-firm effect? (i.e. firms with small market capitalisation have higher returns)

Profit maximizing firms must make decisions regarding the use of technology. What is one of the Keydecisions all profit maximizing firms must make regarding the use of technology?

Identify how the workplace is affected by federal laws regarding hiring and firing, discrimination, and other workplace regulations

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.