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

Expert Solution


Related 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...
You have just been hired as the chief informatics officer (CIO) for a new health system....
You have just been hired as the chief informatics officer (CIO) for a new health system. The heal... You have just been hired as the chief informatics officer (CIO) for a new health system. The health system has 23 acute care facilities and 36 outpatient clinics. It serves as a regional referral center for three states in the Midwest. Your installed base includes a vendor-supplied EHR from a national firm. Work on the data warehouse is just beginning. You have...
You have just been hired as the chief informatics officer (CIO) for a new health system....
You have just been hired as the chief informatics officer (CIO) for a new health system. The health system has 23 acute care facilities and 36 outpatient clinics. It serves as a regional referral center for three states in the Midwest. Your installed base includes a vendor-supplied EHR from a national firm. Work on the data warehouse is just beginning. You have more than 300 varying applications across sites, including everything from a stand-alone pharmacy application for drug interactions to...
You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety...
You have just been hired as a financial analyst for Lydex 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 $ 960,000 $ 1,260,000 Marketable securities 0 300,000 Accounts receivable, net 2,700,000 1,800,000 Inventory 3,900,000...
You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety...
You have just been hired as a financial analyst for Lydex 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 $ 940,000 $ 1,200,000 Marketable securities 0 300,000 Accounts receivable, net 2,620,000 1,720,000 Inventory 3,580,000...
You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety...
You have just been hired as a financial analyst for Lydex 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 $ 1,020,000 $ 1,260,000 Marketable securities 0 300,000 Accounts receivable, net 2,940,000 2,040,000 Inventory 3,660,000...
You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety...
You have just been hired as a financial analyst for Lydex 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 $ 1,040,000 $ 1,280,000 Marketable securities 0 300,000 Accounts receivable, net 3,020,000 2,120,000 Inventory 3,680,000...
You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety...
You have just been hired as a financial analyst for Lydex 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 $ 870,000     $ 1,110,000          Marketable securities 0     300,000          Accounts receivable, net...
You have just been hired as a financial analyst for Lydex Company, a manufacturer of safety...
You have just been hired as a financial analyst for Lydex 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 $ 1,170,000 Marketable securities 0 300,000 Accounts receivable, net 2,580,000 1,680,000 Inventory 3,570,000...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT