Copier Repairs When Kodak leased large photocopiers to businesses, they also bundled a maintenance contract for periodic repairs. Third-party repair firms claimed that Kodak violated antitrust laws because this bundle guaranteed Kodak a monopoly on repairs and excluded competitors' access. Why might the bundle have created value over what third-party repair shops could offer?
Kodak is worried that a poor quality repairman will blame his failure to fix a broken photocopier on a poor Kodak machine. Repairmen who experience unexpected difficulties would not want to reveal their own incompetence. Instead, they can claim to the customer that Kodak just produces poor equipment. A repairman who is a Kodak employee has no incentive to shift the blame.
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Over the next three years, a firm is expected to earn economic profit of $200,000 in the first year, $300,000 in the second year, and $250,000 in the third year. After the end of the third year, the firm goes out of business. If the risk-adjusted discount rate is 9 percent for each of the next three years,
1. The firm can be sold today for a price of $______________. 2. The value of the firm is $______________.
Suppose the United States eliminates steel tariffs. How does the change in steel import restrictions affect automobile manufacturers who use steel as an input?
___________ markets like Hawaii and Florida tend to have more stable prices, while ___________-oriented destinations like Washington, D.C., and Chicago have more price volatility
Fill in the blank(s) with the appropriate word(s).
The Lucas supply function states that real output will not change from its fixed level
A. only if there is a positive price surprise. B. only if there is a negative price surprise. C. only if there is no price surprise. D. Both A and B are possible.