Bearcat University hires Mr. LeBron to coach its basketball team. LeBron's utility function is u= √w-6e, where w denotes his wage and e his effort. He can choose either low effort e 1 or high effort eH=2. If Bearcat wins its division, the university's profit will be 600. Otherwise the university's profit will be 200. LeBron's reservation utility is 4. The university cannot observe LeBron's effort. The probabilities of outcomes given LeBron's effort are: e = 1 еH=2 (Bearcat does not win its division) TL1 200 0.8 0.2 (Bearcat wins its division) T₂=600 0.2 0.8 a. Let w, and we be the wage paid to LeBron if profit is ₁ and ₂, respectively. What are the individual rationality condition and the incentive compatibility condition needed to induce ex? b. Assuming e, is the more desirable of the two effort levels, find the optimal wage contract. What is the university's expected net profit? c. If the university wanted to induce LeBron to choose e, what wage contract should it use? What would be the university's expected net profit?
Q: New equipment to read 96-bit product codes thatare replacing old bar codes has just been purchasedby…
A: Depreciation refers to the decrease in value of a physical asset over time due to wear and tear,…
Q: The interest rate in Japan is 2% and the interest rate in the US is 5%. The spot exchange rate is…
A: The interest rate in Japan is 2% The interest rate in the US is 5% The spot exchange rate is 100 yen…
Q: Consider the 2-player, zero-sum game "Rock, Paper, Scissors". Each player choos one of 3 strategies:…
A: Payoffs for rock ,paper scissors game - Player 2 Rock Paper Scissors Player 1…
Q: Labor Quantity Fixed Cost 1 2 3 4 5 6 16 40 60 72 80 84 $160 $160 $160 $160 $160 $160 Different…
A: Economic costs involve not just the accounting costs but also the opportunity cost of making one…
Q: Give typing answer with explanation and conclusion Briefly explain the relationship between money…
A: Money supply is defined as the total amount of money that is in circulation in the economy at a…
Q: Give typing answer with explanation and conclusion Production function Y=8*K^.33*L^.66 Now what if…
A: Given production function is : Y = 8 K0.33 L0.66
Q: The corresponding table shows the production and cost information for a perfectly competitive firm…
A: A perfectly competitive firm is a type of market structure in which there are many small firms that…
Q: Describe these three arguments that are often used to justify trade barriers: the national security…
A: Trade restrictions are regulations put in place largely to safeguard a country's domestic economy.…
Q: Using the Aggregate Demand and Supply model, demonstrate the impact on the Korean economy of a set…
A: Aggregate demand (AD) is the total demand for goods and services in an economy at a given price…
Q: Consider a firm, using capital (K) and labor (L) in the production process, that wants to expand…
A: A firm using capital (K) and labor (L) in the production process. MPK = 400 cost of capital (r) =…
Q: Give typing answer with explanation and conclusion to all parts The common stock of Teledyne…
A: Introduction: In this scenario, we are given information about Teledyne, a company whose common…
Q: Many would argue that the federal government’s response to the financial crisis of 2008 favored…
A: Financial crisis means decrease in the value of assets and instruments. This affect businesses very…
Q: 4. What components of money are counted as part of M1? A) currency, M2 and checking accounts. B)…
A: “Since you have posted multiple questions, we will provide the solution only to the first question…
Q: Measuring Inflation means to use the (CPI in Year 2-CPI in Year 1)/CPI Year 1 ) x 100 Therefore, if…
A: Since you have posted a question with multiple sub parts, we will provide the solution only to the…
Q: These define what is encouraged, discouraged, accepted, or rejected within a group.
A: Culture expresses the targets through beliefs and values and guides activity via the norms in group…
Q: In the long run, should we perfectly competitive firms a positive accounting profit? Explain your…
A: Perfectly competitive firms are firms operating in a market structure where there are many small…
Q: Derive the life-time budget constraint of this consumer. Set up the consumer’s problem. Solve for…
A: A consumer who chooses between consuming goods and enjoying leisure in the current and future…
Q: Blue Skies Aviation is a manufacturer of small single-engine airplanes. The company is relatively…
A: P=900000-2000Q Cost of producing engine , Ce= 4000Qe2 Cost of assembling airplanes=24000Q
Q: Critically analyse the key macroeconomic concerns
A: Macroeconomics is the study of the general functioning of the economy. Since microeconomics focuses…
Q: Determine the future worth of payment of P2500.00 at the beginning of every quarter for 12 years at…
A: The act of calculating interest on a loan or investment and adding it to the principle sum is known…
Q: If there is a $3 tax, what is the CS, PS, tax revenue, TS, and deadweight loss?
A: The concept of government involvement is any regulating action taken by any state that directly…
Q: (a) Compute and draw in the same graph marginal cost, average cost, average fixed cost and average…
A: AC stands for average cost, which is the total cost of production divided by the quantity produced.…
Q: The graph below depicts equilibrium in the labor market for yoga instructors. Yoga has become…
A: According to the question, Equilibrium in the yoga instructor labour market is seen in the graph…
Q: 1. Consider the following figure to answer the following four questions. (Please note that the…
A: At equilibrium price, quantity demanded equals quantity supplied for a commodity. When the price…
Q: A bank reports the following items on its latest bat ance sheet allowance for loan and lease losses.…
A: A bank is a type of institution that accepts loans and deposits as its primary purpose in exchange…
Q: T/F The patent can be a reason for the monopoly.
A: A market condition known as a monopoly occurs when there is only one seller or producer of a good or…
Q: What are the three properties of indifference curves for two goods?
A: An indifference curve is a graph that displays possible pairings of two goods or commodities that,…
Q: Show how each of the following would affect the U.S. balance of payments. Include a description of…
A: A balance of payments account is critical for an economy since it serves as a crucial signal for a…
Q: Assume the CPI increases from 102 to 113, The rate of inflation for that year is Multiple Choice O O…
A: CPI is the consumer price index. The price index is calculated as the cost of market basket in…
Q: Following the price level decrease, the quantity of money demanded at the initial interest rate of…
A: The money demand curve is downward sloping. It represents the inverse relationship between interest…
Q: Describe Blanchard’s Model of Situational Leadership (Theory) and relate this to coaching strategies…
A: Blanchard's Model of Situational Leadership is a theory that proposes that effective leadership…
Q: You are the manager of a firm that produces products X and Y at zero cost. You know that different…
A: Profit is the monetary benefit that a company or person experiences after deducting all costs from…
Q: PC Connection and CDW are two online retailers that compete in an Internet market for digital…
A: An oligopoly is a market structure in which a small number of suppliers (oligopolists) dominate the…
Q: A new waste truck is needed for a portion of the city. Compare the asset with the Benefit-Cost…
A: A benefit-Cost method is a ratio of the project benefit versus the cost of the project.
Q: Top Left Plot a) market without externalities b) market with positive externalities in consumption…
A: An externality refers to a situation where the production or consumption of goods or services by one…
Q: Consider the monetary intertemporal model. Payments can be made with either credit cards or with…
A: Introduction of a tax on credit card services will affect the monetary intertemporal model in the…
Q: Consider the inverse demand curve: p = 80 - 1Q. Assume the market price is $25.00. Calculate…
A: In a monopoly market structure, There exists a single seller. The monopolist maximize its profit…
Q: What is Inter-industry and Intra-industry trade? How do economies of scale and product variety…
A: Trade refers to the exchange of goods and services between two or more parties, often involving the…
Q: Gasoline prices have been and will continue to be a major issue for the economy. From the start of…
A: Demand refers to the amount of a good or service that consumers are willing and able to purchase at…
Q: 6. Suppose an economy starts with a GDP of $100m. If the economy grows at a rate of 7.5%, how much…
A: GDP is the gross domestic product. GDP is the market value of all the goods and services produced…
Q: Two firms, X and Y, are involved in a price war. The demand equations for each firm are the…
A: Qx = 52 - 2Px + Py (Demand for X) Qy = 52 - 2Py + Px (Demand for Y ) In order to find the Nash…
Q: The coconut oil demand function is Q = 1200 -9.5p + 16.2pp +0.2Y, where Q is the quantity of coconut…
A: Price Elasticity is calculated as the percentage change in quantity divided by the percentage change…
Q: Nicole wants to examine first if she wants to enter the market for Chanel bags and she assumes that…
A: In perfect competition, There exists a single seller. The firm will produce where the price is…
Q: the above graph is a typical firm in a perfectly competitive market, if the market price is 9, then…
A: For a perfectly competitive firm , the price level are fixed in the market and all the firms have to…
Q: Required information A regional infrastructure building and maintenance contractor must decide to…
A: The growth in the economy's price level at a constant rate over a specific time period is referred…
Q: A firm has $2,100,000 in sales, a Lerner index of 0.57, and a marginal cost of $40, and competes…
A: A firm has $2,100,000 in sales. The Lerner index is 0.57 The marginal cost is $40
Q: Gertrude loves both Wolverine Root Beer and Spartan Root Beer equally. What if she goes shopping and…
A: An individual’s willingness to pay for each unit of the quantity he or she wishes to consume is…
Q: Why does the supply curve slope upward? A B C D as price increases the quantity supplied remains the…
A: The supply of any product means that the minimum price at which the supplier is ready to supply the…
Q: Pelican Point Financial Group's clientele consists of two types of investors. The first type of…
A: Investor: An investor is a person who invests cash or another organization in exchange for a profit.…
Q: Value of operations: $950 million Excess cash: $30 million $40 million $30 million Inventory: A/P…
A: Equity value is the portion of a company's total value that belongs to the shareholders or owners of…
Step by step
Solved in 5 steps
- Consider the following graph: AR, MR, ATC, MC w* W* MC = ATC AR=D W A MR a. Indicate the price a profit maximizing firm faces for a win, PPR. Shade in the area that indicates the team's profit. b. Indicate the price a win maximizing firm faces for a win, Pw. Shade in the area that indicates the team's profit.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.Exercise A.9 You are an executive of Super Computer, INC. (SC), which rents supercomputers. SC receives a fixed rent for a period of time in exchange for the right to use unlimited computers equal to P cents per second. SC has two types of potential clients of equal numbers: 10 companies and 10 academic institutions. Each company has the demand function Q = 10 – P, where Q is expressed in millions of seconds per month; each academic institution has the demand Q = 8 – P. The marginal cost to SC of additional computer utilization is 2 cents per second, regardless of volume. a) Suppose you can distinguish companies from academic clients. What rental and usage fee would you charge each group? Calculate the profits you would get? b) Suppose that you cannot separate the two types of customers and that you did not charge a rental fee. What usage quota would maximize your profits? How many benefits would you get?
- Exercise A.9 You are an executive of Super Computer, INC. (SC), which rents supercomputers. SC receives a fixed rent for a period of time in exchange for the right use unlimited computers equal to P cents per second. SC has two types of potential clients of equal numbers: 10 companies and 10 academic institutions. Each company has the demand function Q = 10 - P, where Q is expressed in millions of seconds per month; each academic institution has the demand Q = 8 - P. The marginal cost to SC of additional computer utilization is 2 cents per second, regardless of volume. a) Suppose you can distinguish companies from academic clients. What rental and usage fee would you charge each group? Calculate the profits you would get? b) Suppose that you cannot separate the two types of customers and that you did not charge a rental fee. What usage quota would maximize your profits? How many benefits would you get?Joe has just moved to a small town with only one golf course, the Northlands Golf Club. His inverse demand function is p=140-2q, where q is the number of rounds of golf that he plays per year. The manager of the Northlands Club negotiates separately with each person who joins the club and can therefore charge individual prices. This manager has a good. idea of what Joe's demand curve is and offers Joe a special deal, where Joe pays an annual membership fee and can play as many rounds as he wants at $20, which is the marginal cost his round imposes on the Club. Joe marries Susan, who is also an enthusiastic golfer. Susan wants to join the Northlands Club. The manager believes that Susan's inverse demand curve is p=120-2q. The manager has a policy of offering each member of a married couple the same two-part prices, so he offers them both a new deal. What two-part pricing deal maximizes the club's profit? Will this new pricing have a higher or lower access fee than in Joe's original…The Broadway show Hamilton is coming to perform for one night. There are two types of consumers interested in the show- current students and rich alumni. The demand curve for the student market is Q= 300-0.4P with marginal revenue MR= 750-5Q. The demand curve for the alumni market segment is Q=600-0.1P with marginal revenue MR=6000-20Q. If the two types of consumers are in the market, the MR=1800-4Q. The cost function is C(Q)=200Q and the marginal cost of serving either customer is MC=200. 2. How much total consumer surplus is generated?
- A. Suppose the inverse demand curve in a market is D(p) =a-bp, where D(p) is the quantity demanded and p is the market price. Firm 1 is the leader and has a cost function c1(y1)=cy1 while firm 2 is the follower with a cost function c2(y2 )=. Firm 1 sets its price to maximise its profit. Firm 1 correctly forecasts that the follower takes the price leader’s chosen price as given (price taker) and chooses output so as to maximise its own profit. Write down the profit function of the follower. Calculate the profit maximising quantity that the follower selects given the leader’s chosen price p (i.e., calculate the follower’s supply curve S(p)). Interpret the solution to the profit maximising problem. B. The leader is facing the residual demand curve R(p)=D(p)-S(p) with D(p) and S(p) as defined in (c) above. Calculate the leader’s residual demand curve using the result in (b). Solve for p as a function of the leader’s output y1, i.e. the inverse demand function facing the leader. Write…The Broadway show Hamilton is coming to perform for one night. There are two types of consumers interested in the show- current students and rich alumni. The demand curve for the student market is Q= 300-0.4P with marginal revenue MR= 750-5Q. The demand curve for the alumni market segment is Q=600-0.1P with marginal revenue MR=6000-20Q. If the two types of consumers are in the market, the MR=1800-4Q. The cost function is C(Q)=200Q and the marginal cost of serving either customer is MC=200. 1. Assume the show knows there are different types of consumers but can not tell the difference so they must sell tickets at a single price. At what price do all consumers enter the market? What profit-maximizing price and quantity are the tickets sold at?******ONLY ANSWER PART 3 IN PICTURE PLEASE**** Demand for Thunder games in Oklahoma City is given by: P(0)=430-20 Seattle does not currently have an NBA team, but they would like to attract the the Thunder. ok ok ok Demand for Thunder games in Seattle is given by: P (Q) = 490 -20 The marginal cost of production in both cities is constant at MC = 70. Suppose that the Thunder faces an extra fixed cost of 10000 in Seattle because they need to build a new stadium if they move. If the Thunder decides to stay in Oklahoma City, they don't need to pay the fixed cost. Cities can still offer bids to attract the team. a) Will the Thunder move to Seattle? b) How much is the winning bid? c) What is the profit plus bid for the Thunder? d) What is the value minus bid for the winning city?
- UCOM is able to purchase an exclusive right to sell a soccer channel (SC) in its market area. Let's assume that UCOM pays $150,000 a year for the exclusive marketing rights to SC. Since UCOM has already installed cable to all of the homes in its market area, the marginal cost of delivering Soccer Channel to subscribers is zero. The manager of UCOM needs to know what price to charge for the Soccer Channel service to maximize her profit. Before setting price, she hires an economist to estimate demand for the Soccer channel service. The economist discovers that there are two types of subscribers who value soccer. First are the 4,000 die-hard soccer fans who will pay as much as $150 a year for the new soccer channel. Second, the soccer channel will appeal to about 20,000 occasional TV viewers who will pay as much as $20 a year for a subscription to soccer channel. What is the deadweight loss associated with the non-discriminating pricing policy compared to the price discriminating…Verizon can be viewed as a first mover. Now suppose both ATT and Verizon are considering whether and how to enter a potential market. Market demand is given by the inverse demand function p= 900−q1−q2, where p is the market price margin, q1 is the quantity sold by Verizon and q2 is the quantity sold by ATT. To enter the market, a retailer must build a store. Two types of stores can be built: Small and Large. The Small store requires an investment of $50,000, and it allows the retailer to sell as many as 100 units of the goods at zero marginal cost. Alternatively, they can pay $175,000 to construct a Large store that will allow it to sell any number of units at zero marginal cost. Assume Verizon enters and builds a Large store (i.e. chooses to build a Large store L1 at the first stage.) Calculate Verizon's profit for the following cases: a.) ATT chooses not to enter N at the second stage after viewing Verizon's choice. b.) ATT chooses to build a Small store S at the second stage…Verizon can be viewed as a first mover. Now suppose both ATT and Verizon are considering whether and how to enter a potential market. Market demand is given by the inverse demand function p= 900−q1−q2, where p is the market price margin, q1 is the quantity sold by Verizon and q2 is the quantity sold by ATT. To enter the market, a retailer must build a store. Two types of stores can be built: Small and Large. The Small store requires an investment of $50,000, and it allows the retailer to sell as many as 100 units of the goods at zero marginal cost. Alternatively, they can pay $175,000 to construct a Large store that will allow it to sell any number of units at zero marginal cost. Assume Verizon stays out of the potential market (i.e. chooses not to enter N1 at the first stage, q1= 0). Calculate Verizon's profit for the following cases: a.) ATT chooses not to enter N at the second stage after viewing Verizon's choice. b.) ATT chooses to build a Small store S at the second stage…