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A firm spent $10 million to develop a product for market. In the product’s first two years, its profit was $6 million. Recently, there has been an influx of comparable products offered by competitors (imitators in the firm’s view). Now the firm is reassessing the product. If it drops the product, it can recover $2 million of its original investment by selling its production facility. If it continues to produce the product, its estimated revenues for successive two-year periods will be $5 million and $3 million and its costs will be $4 million and $2.5 million. (After four years, the profit potential of the product will be exhausted, and the plant will have zero resale value.) What is the firm’s best course of action?
Forecast the demand for the rice for a country for the year 2021 on the basis of 7-year
moving average and least square method, data given in table:
Year 2014 2015 2016 2017 2018 2019 2020
Population (millions) 10 12 15 20 25 30 40
Rice consumed (million tonnes) 40 50 60 70 80 90 100
If the government levies an additional tax on lucury items the price of these items will rise how ever this will cause demand to decrease and as aresult the price will fall back down perhaps even to their original levels. Do you agree with this statement ? Explain
A firm spent $10 million to develop a product for market. In the product’s first two years, its profit was $6 million. Recently, there has been an influx of comparable products offered by competitors (imitators in the firm’s view). Now the firm is reassessing the product. If it drops the product, it can recover $2 million of its original investment by selling its production facility. If it continues to produce the product, its estimated revenues for successive two-year periods will be $5 million and $3 million and its costs will be $4 million and $2.5 million. (After four years, the profit potential of the product will be exhausted, and the plant will have zero resale value.) What is the firm’s best course of action?
suppose you are a monopolist and find that the demand elasticity of your product is different in two market what would be your pricing strategy
Write ten pairs of commodities which are substitute for you and ten pairs of commodities ehich are complements for you
Given the following market function, find the equilibrium price and quantity:
[6 marks]
Qd = 54 – 4p
Qs = 4 + 4p
Show that 〖MU〗_x/P_x = 〖MU〗_y/P_y = 〖MU〗_n/P_n = λ
Monopolistic market has characteristics of both perfectly competition and monopoly market, what makes it different from these two, how price and output can be determined in monopolistic market structure.
. What is free-riding? Why do self-interested players free-ride? Explain via an example.
