DEPARTMENT OF ECONOMICS Economics 340H – FA 07 OSH Assignment #3 Instructor: Christopher Michael Due Date: Dec 6, 2007 Question 1 – Perfect Competition and Monopolistic Competition Superior Metals Company has seen its sales volume DECLINE over the last few years as the result of rising foreign imports. In order to INCREASE sales (and hopefully, profits), the firm is considering a price reduction on luranium, a metal that it produces and sells. The firm currently sells 60,000 kilos of luranium a year at an average price of $10 per kilo. Fixed costs of producing luranium are $250,000. Current variable costs per kilo are $5. The firm has determined that the variable cost per kilo could be reduced by $0.50 if production …show more content…
As a niche manufacturer, Embraer makes aircraft that offer excellent reliability and cost effectiveness. To illustrate the price leadership concept, assume that total and marginal cost functions for Airbus (A) and Embraer (E) aircraft are as follows: TCA = $10,000,000 + $35,000,000QA + $250,000QA2 MCA = $35,000,000 + $500,000QA TCE = $200,000,000 + $20,000,000QE + $500,000QE2 MCE = $20,000,000 + $1,000,000QE Boeing’s total and marginal cost relations are as follows: TCB = $4,000,000,000 + $5,000,000QB + $62,500Q2B MCB = ΔTCB/ΔQB = $5,000,000 + $125,000QB The industry demand curve for this type of jet aircraft is: Q=910 - 0.000017P Assume throughout this problem that the Airbus and Embraer aircraft are perfect substitutes for Boeing’s Model 737-600, and that each total cost function includes a risk-adjusted normal rate of return on investment. A. Determine the supply curves for Airbus and Embraer aircraft, assuming that the firms operate as price takers. B. What is the demand curve faced by Boeing? C. Calculate Boeing’s profit-maximizing price and output levels. (Hint: Boeing’s total and marginal revenue relations are TRB = $50,000,000QB - $50,000Q2B, and MRB =ΔTRB/ΔQB = $50,000,000 - $100,000QB.) D. Calculate profit-maximizing output levels for the Airbus and Embraer aircraft. E. Is the market for aircraft from these three firms in short-run or long-run
7. In capitalism, most businesses have a profit motive. Describe at least one reason that businesses with a profit motive may be helpful for society and at least one reason that they may be harmful for society. Then, explain whether you think profit motive is a good thing or a bad thing for society. (4-7 sentences. 2.0 points)
3. What type of bank risk would worry you the most as an account holder? How should the bank protect itself against that risk? (2-4 sentences. 1.0 points)
With only a few large companies across the globe (Boeing, MD, and Airbus), the commercial aircraft industry essentially exhibits the qualities of an oligopolistic competition with intense rivalry. Here is an analysis of competition in the commercial aircraft business using Porter’s Five Forces.
Looking back from when I began my career, I can say I came a long way learning the concepts of understanding the expectations that arose from all my positions. In my first job just after graduating, I was appointed as a Business Accountant of a multinational company. Since then, I was caught in the myth that people who were in leadership positions or high ranking were leaders. Being in a junior position, I could have the least effect on any new ideas as my voice seems to have landed in deaf ears. I have seen how those businesses were not in line with their Missions and Values only to find later that many of the staff had left the company.
addition, the policy indirectly supports the families of the elderly. It does so by offering services to caregivers that prevent or shorten costly nursing home placements, relieving financial strain, and providing educational programs to give a better understanding of aging. However, due to insufficient funding OAA services have restricted access and cannot reach all the elderly in need. Statistical demographics reveal that 27% of seniors that are receiving services are below the poverty line, recipients are more likely to be female (71% vs 57%), twice as likely to be rural, more likely to live alone, have less income, less educated, and less healthy than the average senior (Herrera 2013).
1) What are Alex’s rights, if any, in this situation? Outline the steps Alex would go
The price of cheese and milk in the market are $2 and $5 respectively. Assume that the cheese and milk markets are perfectly competitive. What output of milk maximizes profits?
Policy and procedures are often changes in light of new evidence based practice. After education myself on the Safe to Sleep initiative, I set out to educate others. Knowing that many policy and procedure changes must go thru the quality council I began my education there before moving on to staff education.
BA 578 Assignment-Sol- due by Midnight (11:59pm) Monday, Sept 15th, 2014(Chapters 1, 2, 3 and 4): Total 75 points
Chapter 9 1. Two car manufacturers, Saab and Volvo, have fixed costs of $1 billion and constant marginal costs of $10,000 per car. If Saab produces 50,000 cars per year and Volvo produces 200,000, calculate the average fixed cost and average total cost for each company. On the basis of these costs, which company’s market share should grow in relative terms? Answer: Average total cost is average fixed cost plus marginal cost: ATC = FC/Q + MC. Volvo’s average fixed cost $1 billion/200,000 = 5,000 is much less than Saab’s average fixed cost $1 billion/50,000 = 20,000 due to producing more cars. Volvo’s average production cost $15,000 is lower than Saab’s of $30,000 by the difference in average fixed costs. Volvo’s
The Rivalry Between Boeing and Airbus The rivalry between Boeing and Airbus goes back a long way, when Boeing was by far the dominant supplier of commercial airplanes. Up until 1997, Boeing was the clear market leader on the passenger airplane market. Now the situation is less certain, as Airbus has overtaken its American competitor[1] not only in the domestic market but also in the world market, with its introduction of new models of passenger aircrafts. The main issue addressed in this article is that a 1992 U.S.-EU civilian aircraft pact allows too much European government support for Airbus, helping it sell more jetliners than Boeing, which had an 80% share in the market a decade ago.
It may be argued that the next major challenge in the business of air transportation, beyond the invention of heavier-than-air flight and jet-powered planes, is the worldwide separation of the market between two mega-corporations. Airbus and Boeing currently dominate about 90% of the air transportation market with very few major competitors on the horizon. However, Canadian-based Bombardier is creeping up in its business jet market share of 27% (Bombardier press release, 12/4/2003). The competition between Airbus
At this moment only Boeing and Airbus belong to segment of large commercial airplanes (LCA), with firms such as Embraer of Brazil and Bombardier of Canada taking up positions within the segment of regional jets in North America, firms such as Gulfstream and LearJet round out the market of private jets (Heppenheimer 2001:135). There are striking differences between the LCA and regional jet segments. The LCA market is truly global, which will be
2. a) Explain the method of cost-plus pricing and state its limitations. Point out cases where it is