Present a Sweezy model, show a cost change, and show that the optimal choice for the firm is to leave the product price unchanged. Provide words to explain the basic reason why the price does not move up or down as costs change.
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One of the observations that has been made about the pricing of products produced in an industry where production is highly concentrated is that the costs of production can change up or down and yet prices do not change much. The Sweezy model was developed to explain this observation. Present a Sweezy model, show a cost change, and show that the optimal choice for the firm is to leave the product price unchanged. Provide words to explain the basic reason why the price does not move up or down as costs change.
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- The following table represents the demand schedule (given by the first two columns of the table), TC, MC, TR and MR for one of many landscaping companies in Florida. The service the company provides includes mowing, planting some flowers and trimming trees. Use the information from the table to answer the questions below. The goal of the landscaping company is to maximize its profit. How many customers should it serve per day? What price should it charge? How much profit does this company make per day if it is maximizing its profit?Jabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced four trucks, but then decided to increase production to five trucks. The following graph gives the demand curve faced by Jabari's HookNLadder. As the graph shows, in order to sell the additional fire truck, Jabari must lower the price from $105,000 to $90,000 per truck. Notice that Jabari gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial four engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial four engines by selling at $90,000 rather than $105,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $90,000. PRICE (Thousands of dollars per fire engine) Jabari 165 150 135 120 105 90 75 60 45 30 15 D 0 True 1…Jabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced four trucks, but then decided to increase production to five trucks. The following graph gives the demand curve faced by Jabari’s HookNLadder. As the graph shows, in order to sell the additional fire truck, Jabari must lower the price from $105,000 to $90,000 per truck. Notice that Jabari gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial four engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial four engines by selling at $90,000 rather than $105,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $90,000
- You decide to create a burger restaurant named BurgerDeals to help pay for college fees. The table below contains total pricing information for your single product, large extra-cheese burger. Your town's burger market is fiercely competitive, with big extra-cheese burger selling for $7 on average. Fill in the blanks in the table and answer the following question. What does each burger cost on average if you make 8 burgers?Jabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced five trucks, but then decided to increase production to six trucks. The following graph gives the demand curve faced by Jabari's HookNLadder. As the graph shows, in order to sell the additional fire truck, Jabari must lower the price from $160,000 to $120,000 per truck. Notice that Jabari gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial five engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial five engines by selling at $120,000 rather than $160,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $120,000. PRICE (Thousands of dollars per fire engine) 220 200 180 160 140 120 100 80 60 40 0 Jabari 0 + 1 True…Jabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced five trucks, but then decided to increase production to six trucks. The following graph gives the demand curve faced by Jabari's HookNLadder. As the graph shows, in order to sell the additional fire truck, Jabari must lower the price from $160,000 to $120,000 per truck. Notice that Jabari gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial five engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial five engines by selling at $120,000 rather than $160,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $120,000. PRICE (Thousands of dollars per fire engine) 220 200 180 160 140 120 100 80 60 40 20 Jabari 0 0 1 2 3…
- Jabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced eight trucks, but then decided to increase production to nine trucks. The following graph gives the demand curve faced by Jabari's HookNLadder. As the graph shows, in order to sell the additional fire truck, Jabari must lower the price from $80,000 to $40,000 per truck. Notice that Jabari gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial eight engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $40,000 rather than $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $40,000. PRICE (Thousands of dollars per fire engine) 220 200 180 160 140 120 100 80 60 40 20 0 Jabari 0 1 O…Asim's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Asim initially produced eight trucks, but then decided to increase production to nine trucks. The following graph gives the demand curve faced by Asim's HookNLadder. As the graph shows, in order to sell the additional fire truck, Asim must lower the price from $80,000 to $40,000 per truck. Notice that Asim gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial eight engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $40,000 rather than $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $40,000. PRICE (Thousands of dollars per fire engine) 220 Asim 200 180 160 140 120 100 80 60 40 20 0 0 1 True 2 False 4 5…The widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $18, $14, $12, $6, and $3 (one seller at each price). Five buyers are willing to buy one widget at the following prices: $12, $14, $18, $28, and $34 (one buyer at each price). For each price shown in the following table, use the given information to enter the quantity demanded and quantity supplied. Quantity Demanded Quantity Supplied (widgets) (widgets) Price ($ per widget) $3 $6 $12 $14 $18 $28 $34 In this market, the equilibrium price will be per widget, and the equilibrium quantity will be 4 5 0 3 1 2 widgets.
- Using the graph on the next page, do the following problems: Determine the profit maximizing level of output when the market price for the good is $75/unit. Show this on the graph by making the appropriate drawing (with a straight-edge). Also, write the number (an appropriate estimate should be made) below the graph. • On the graph, show the maximum total profit that can be generated by the firm based on the market price. Do NOT calculate the value - show the appropriate box on the graph. Be careful in your (straight) lines. Be clear as to the part of the graph that represents the profit. Use shading as appropriate. • Below the graph, write the interpretation of the values of the marginal cost (MC) and the average total cost (ATC) at the profit-maximizing level of output; make sure to use all the appropriate names and units. Write the values and interpretations below the graph. • Answer the following questions: If the market price of the good falls, the profit maximizing level of…Omari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Omari initially produced four trucks, but then decided to increase production to five trucks. The following graph gives the demand curve faced by Omari's HookNLadder. As the graph shows, in order to sell the additional fire truck, Omari must lower the price from $105,000 to $90,000 per truck. Notice that Omari gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial four engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial four engines by selling at $90,000 rather than $105,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $90,000. PRICE (Thousands of dollars per fire engine) 165 150 135 120 105 Omari 90 75 60 45 30 15 Revenue Lost Demand…Increasing demand from China has made New Zealand the world's biggest exporter of dairy products . Its exports of milk to China increased by 45 % in 2013. More than 300 000 hectares land in New Zealand have been transferred to dairy use from other forms of farming and forestry use since 2000. The increase in milk production has caused the average cost of its production to fall and changes in production methods have affected the price elasticity of supply of milk . Discuss whether the average cost of production always decreases when a firm increases the total output that it produces(Define economies of scale and diseconomies of scale Use of graph to explain ( if applicable ) Explain the various economies of scale e.g. purchasing economies of scale [ up to 5 ] Explain the various diseconomies of scale [ up to Brief conclusion)
