Question
In: Economics
You have just been hired as the chief economist for Aarons (an eraser manufacturer) who currently...
You have just been hired as the chief economist for Aarons (an eraser manufacturer) who currently enjoys a patented technology that allows it to produce erasers faster and at a lower cost than your only rival, Zacharys. Aarons has used this advantage to be to enable them to be the first mover in the eraser market and as such can choose to operate at the profit-maximising output level. Aarons cost function is CA(QA) = 2QCA, where as Zacharys cost function is CZ(QZ) = 4QZ and the inverse demand function for erasers is P = 500 − 2Q.
(a) Given the above information calculate the profit-maximising output levels for both Aarons and Zacharys.
(b) Given the above information calculate the equilibrium price in this market.
(c) Calculate the amount of profit each firm earns.
(d) Your firm has decided to merge with Zacharys, determine the offer that would enable the merger to be profitable to you firm.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
You have just been hired as the chief economist for Aarons (an eraser manufacturer) who currently...
You have just been hired as the chief economist for Aarons (an
eraser manufacturer) who currently enjoys a patented technology
that allows it to produce erasers faster and at a lower cost than
your only rival, Zacharys. Aarons has used this advantage to be to
enable them to be the first mover in the eraser market and as such
can choose to operate at the profit-maximising output level. Aarons
cost function is CA(QA) = 2QCA, where as Zacharys cost function...
You have just been hired as the chief economist for Aarons (an eraser manufacturer) who currently...
You have just been hired as the chief economist for Aarons (an
eraser manufacturer) who currently enjoys a patented technology
that allows it to produce erasers faster and at a lower cost than
your only rival, Zacharys. Aarons has used this advantage to be to
enable them to be the first mover in the eraser market and as such
can choose to operate at the profit-maximising output level. Aarons
cost function is CA(QA) = 2QCA, where as Zacharys cost function...
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You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety...
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to perform a comprehensive analysis of the company’s financial
statements, including comparing Lydex’s performance to its major
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Company, a manufacturer of safety helmets. Your boss has asked you
to perform a comprehensive analysis of the company’s financial
statements, including comparing Lydex’s performance to its major
competitors. The company’s financial statements for the last two
years are as follows:
Lydex Company
Comparative Balance Sheet
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Last Year
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You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety...
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Company, a manufacturer of safety helmets. Your boss has asked you
to perform a comprehensive analysis of the company’s financial
statements, including comparing Lydex’s performance to its major
competitors. The company’s financial statements for the last two
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Accounts receivable, net
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Inventory
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You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety...
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Company, a manufacturer of safety helmets. Your boss has asked you
to perform a comprehensive analysis of the company’s financial
statements, including comparing Lydex’s performance to its major
competitors. The company’s financial statements for the last two
years are as follows:
Lydex Company
Comparative Balance Sheet
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You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety...
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Company, a manufacturer of safety helmets. Your boss has asked you
to perform a comprehensive analysis of the company’s financial
statements, including comparing Lydex’s performance to its major
competitors. The company’s financial statements for the last two
years are as follows:
Lydex Company
Comparative Balance Sheet
This Year
Last Year
Assets
Current assets:
Cash
$
930,000
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Marketable securities
0
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Accounts receivable, net
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1,680,000
Inventory
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