Business, 04.08.2021 17:50 bigmouth804
Two firms compete in a homogeneous product market where the inverse demand function is P = 20 -5Q (quantity is measured in millions). Firm 1 has been in business for one year, while Firm 2 just recently entered the market. Each firm has a legal obligation to pay one year’s rent of $0.4 million regardless of its production decision. Firm 1’s marginal cost is $2, and Firm 2’s marginal cost is $10. The current market price is $15 and was set optimally last year when Firm 1 was the only firm in the market. At present, each firm has a 50 percent share of the market. a. Based on the information above, what is the likely reason that Firm 1’s marginal cost is lower than Firm 2’s marginal cost? multiple choice 1 Second-mover advantage Limit pricing Learning curve effects Direct network externality b. Determine the current profits of the two firms. Instruction: Enter all responses rounded to two decimal places. Firm 1's profits: $ million Firm 2's profits: $ million c. What would each firm’s current profits be if Firm 1 reduced its price to $10 while Firm 2 continued to charge $15? Instruction: Enter all responses to two decimal places. Firm 1's profits: $ million Firm 2's profits: $ million d. Suppose that, by cutting its price to $10, Firm 1 is able to drive Firm 2 completely out of the market. After Firm 2 exits the market, does Firm 1 have an incentive to raise its price? multiple choice 2 No Yes e. Is Firm 1 engaging in predatory pricing when it cuts its price from $15 to $10? multiple choice 3 No Yes
Answers: 2
Business, 22.06.2019 03:30
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Business, 22.06.2019 08:00
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Business, 22.06.2019 09:20
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Business, 22.06.2019 09:40
As related to a company completing the purchase to pay process, is there an accounting journal entry "behind the scenes" when xyz company pays for the goods within 10 days of the invoice (gross method is used for discounts and terms are 2/10 net 30) that updates the general ledger?
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Two firms compete in a homogeneous product market where the inverse demand function is P = 20 -5Q (q...
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