The industry elasticity of demand for airline travel is −3 and the elasticity of demand for an individual carrier is −4. What is the Rothschild index for this industry?
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- own price elasticity of market demand for retail gasoline is -0.8,the Rothschild index is 0.5, and a typical gasoline retailer enjoys sales of$1.5 million annually. What is the price elasticity of demand for a representative gasoline retailer's product?Refer to the figure below:Use the estimated elasticities to calculate the Rothschild index for each industry.Instruction: Enter your responses rounded to three decimal places for the Rothschild Index column in the table.Suppose the own price elasticity of market demand for retail gasoline is −0.6, the Rothschild index is 0.4, and a typical gasoline retailer enjoys sales of $1.5 million annually 1. What is the price elasticity of demand for a representative gasoline retailer’s product? 2. Now assume a Lerner index of 0.6, and a marginal cost of $40, What price does this firm charge its customers? 3. By what factor does this firm mark up its price over marginal cost? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- You are the manager of a monopolist that produces women shoes and faces a random marginal cost. The demand for women shoes is O = 1000 - 0.1P Marginal cost can be constant at either $60 with a probability of 50% or $40 with a probability of probability of 50%. Draw a graph and plot the demand for shoes. Derive the marginal revenue curve and plot it on the graph. Find the price and output that maximize profits. Find the firm's profits.Use the estimated elasticities in Table to calculate the Rothschild index for each industry. Based on these calculations, which industry most closely resembles perfect competition? Which industry most closely resembles monopoly?Suppose that econometricians at Hallmark Cards determine that the price elasticity of demand for greeting cards is -2. (a) If Hallmark's marginal cost of producing cards is constant and equal to $1.00, use the Lerner Index to determine what price Hallmark should charge to maximize profit. (b) Suppose that Hallmark Cards wishes to know the price elasticity of demand faced by its archrival, American Greetings. Hallmark hires you to estimate it. Hallmark provides you with an educated guess concerning the marginal cost of producing a greeting card, which they estimate to be constant and equal to $1.22. A quick trip to the store tells you that American Greetings is selling its cards for an average of $3.25. Using these numbers and assuming that American Greetings is maximizing profit, calculate the price elasticity of demand faced by American Greetings Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You…
- Not long ago, the Federal Communications Commission (FCC) implemented “local number portability” rules allowing cellular phone consumers to switch cellular providers within the same geographic area and maintain the same phone number. How would you expect this change to affect the Rothschild index for the cellular service industry?Suppose that BMW can produce any quantity of cars at a constant marginal cost equal to $20,000 and a fixed cost of $10 billion. You are asked to advise the CEO as to what prices and quantities BMW should set for sales in Europe and in the United States. The demand for BMWs in each market is given by QE = 4,000,000 - 100PE and Qu = 1,500,000 –- 20PU where the subscript E denotes Europe, the subscript U denotes the United States. Assume that BMW can restrict U.S. sales to authorized BMW dealers only. a. What quantity of BMWs should the firm sell in each market, and what should the price be in each market? What should the total profit be? (round dollar amounts to the nearest penny and quantities to the nearest integer) In Europe, the equilibrium quantity is cars at an equilibrium price of $ While in the United States, the equilibrium quantity is cars at an equilibrium price of $ BMW makes a total profit of SConsider PNW Airlines, an airline focused on transporting cargo. Their fleet is composed of four cargo airplanes. Total cargo capacity of the fleet is 100,000 cubic feet. The monthly cost of maintaining and operating the fleet is $50,000. Market research indicated that the demand curve for cargo capacity is d=300,000-25,000p where d is the demand across all segments and p is the transport price per cubic foot. What is the price that maximizes profit for PNW Airlines if all the demand comes from a single segment?
- Techvana is the manufacturer of a new drug which they obtained a patent for. The marginal cost of production is $175 per bottle and the elasticity of demand is estimated to be 1.86. What is the optimal price Techvana should charge for a bottle? $94.09 $113.81 $378.49 $325.5 Grizzly Gear manufactures and sells its top tier snowshoes for $1839. Marginal cost of production per pair is $1100 and fixed cost is $362. What is the markup charged on a pair of snowshoes? $1839 $1477 $377 $739AOF is the only firm selling beer around Isla Vitas, which has a beer fountain in the backyard so the marginal cost of producing beer is 0. There are two groups of consumers: students and non students. The students' beer inverse demand function is p = 60 – 6q , and the non-students' beer inverse demand function is p = 10 – 2q. AOF sells beer in two sizes: 10 ounces bottle and 5 ounces can. Due to a local act, the consumers can only buy either 1 bottle or 1 can of beer. AOF can charge different prices on each bottle and each can of beer, while it cannot tell whether a customer is a student or not. In order to maximize the profits, how much should AOF charge its 10 ounces bottle? Answer: 37.5 The correct answer is: 100.0Two dermatologist practices want to merge. The price elasticity of demand for dermatology services is -0.35. Firm 1 has a volume of 7,500, fixed costs of $70,000, marginal costs of $20, and a market share of 8%. Firm 2 has a volume of 15,600, fixed costs of $65,000, marginal costs of $20, and a market share of 12 percent. The merged firm will have a volume of 21,500, fixed costs of $95,000, marginal costs of $20, and a market share of 20%. What are the total costs, prices, revenues, and profits for each firm and for the merged firm, respectively?