Assume that a firm's marginal cost is $10 and the elasticity of demand is -2. We can conclude that the firm's profit maximizing price is approximately
A) $20.
B) $5.
C) $10.
D) The answer cannot be determined without additional information.
A
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Refer to Figure 14-9. Uniguest, Inc is a company that provides PCs with internet access and touch-sensitive screens to hotels
Suppose the Hard Rock Hotel and Casino in Las Vegas informs Uniguest that it is considering installing these systems in its hotel rooms. The Hard Rock expects to be able to charge higher prices for these rooms if it installs Uniguest's systems in its rooms. The two companies begin bargaining over what price the Hard Rock will pay Uniguest for its systems, and the decision tree shown above illustrates this bargaining game. Note that the profit figures listed in the decision tree are additional profits for the Hard Rock and total profits for Uniguest. a. Suppose the Hard Rock offers Uniguest $1,200 per system. Will Uniguest accept or reject this offer? Why? b. Suppose the Hard Rock offers Uniguest $800 per system. Will Uniguest accept or reject this offer? Why? c. Suppose Uniguest attempts to obtain a favorable outcome from the bargaining by telling the Hard Rock it will reject an $800-per-system offer. If the Hard Rock does not believe the threat is credible, what will it do? Why? What will Uniguest do? Why? d. Is there a subgame-perfect equilibrium in this situation? Explain.
Which of the following best describes a cartel?
a. As a monopolist, a group of monopolistically competitive firms that jointly reduce output and raise the price. b. As a monopolist, a group of cooperating oligopolists that jointly reduce output and raise the price. c. A monopolist that reduces output and raises price. d. A group of identical non-cooperative oligopolists that are able to reproduce a monopoly equilibrium through price rivalry.
Which of the following conditions is least likely to make a corporation a takeover target?
a. high asset-to-liability ratio b. little stock owned by corporate management c. few shares owned by the corporation d. a nonmanagement group of owners of significant shares e. satisfaction with corporate earnings and direction
An increase in interest rates decreases the marginal revenue product of investment.
Answer the following statement true (T) or false (F)