Table 12-3.next.ecollege.com/ec/courses/15853/CRS-MT445-6172697/ContentItem_170910064/f12g2q18g1.gif” alt=””>Table 12-3 shows the firm’s demand and cost schedules for a firm in monopolistic competition.Refer to Table 12-3.What is the amount of the firm’s loss at its optimal output level? $0 $31 $45 $50Points Received:1 of 1Comments:Question 2.Question :You have just opened a new Italian restaurant in your hometown where there are three other Italian restaurants. Your restaurant is doing a brisk business and you attribute your success to your distinctive northern Italian cuisine using locally grown organic produce. What is likely to happen to your business in the long run? Your competitors are likely to change their menus to make their products more similar to yours. Your success will invite others to open competing restaurants and ultimately your profits will be driven to zero. If your success continues, you will be likely to establish a franchise and expand your market size. If you continue to maintain consistent quality, you will be able to earn profits indefinitely.Points Received:1 of 1Comments:Question 3.Question :Table 12-2.next.ecollege.com/ec/courses/15853/CRS-MT445-6172697/ContentItem_170910064/f12g2q7g1.gif” alt=””>Eco Energy is a monopolistically competitive producer of a sports beverage called Power On. Table 12-2 shows the firm’s demand and cost schedules. Refer to Table 12-2.What is likely to happen to the product’s price in the long run? It will fall. It will increase. It will remain constant. Cannot be determined without information on its long run demand curve.Points Received:1 of 1Comments:Question 4.Question :In the long run, if price is less than average cost, there is an incentive for firms to exit the market. there is profit incentive for firms to enter the market. the market must be in long-run equilibrium. there is no incentive for the number of firms in the market to change.Points Received:1 of 1Comments:Question 5.Question :Figure 12-3.next.ecollege.com/ec/courses/15853/CRS-MT445-6172697/ContentItem_170910064/f12g2q9g1.jpg” alt=””>Figure 12-3 shows short run cost and demand curves for a monopolistically competitive firm in the market for designer watches. Refer to Figure 12-3.What is the area that represents the total revenue made by the firm?Student Answer: 0P0aQa 0P1bQa.next.ecollege.com/Images/checkmark.gif” alt=”CORRECT”> 0P2cQa 0P3dQaPoints Received:1 of 1Comments: 6.Figure 13-4 .next.ecollege.com/ec/courses/15853/CRS-MT445-6172697/ContentItem_170910064/f13g3q14g1.jpg” alt=””>Rainbow Writer (RW) is a small online company selling a highly rated software package for printing color labels directly onto CDs. The firm currently earns a profit of $2 million per year selling its package exclusively on its website. Odeon, the producer of the most popular software package for editing and burning CDs and DVDs, has expressed interest in bundling Rainbow Writer’s product into its own package. Odeon expects that bundling would further boost its sales and allow it to sell the new bundled product at a higher price, thus raising its profits beyond its current profit of $12 million. Figure 13-4 shows the decision tree for the Rainbow Writer-Odeon bargaining game.Refer to Figure 13-4.In a real world situation involving Rainbow Writer and Odeon, what scenario below might permit Rainbow Writer to rationally refuse an offer from Odeon of $40 per copy of the software package? Odeon is also negotiating with Swift Colors, Rainbow Writer’s chief rival. Odeon’s competitors are also interested in bundling Rainbow Writer’s software. Odeon hires a software developer to begin developing its own proprietary color labeling software. Odeon is considering new distribution outlets for its products.Points Received:0 of 1Comments:Question 7.Question :In an oligopoly market the pricing decisions of all other firms have no effect on an individual firm. individual firms pay no attention to the behavior of other firms. advertising of one firm has no effect on all other firms. one firm’s pricing decision affects all the other firms.Points Received:1 of 1Comments:Question 8.Question :The “Discount Department Stores” industry is highly concentrated. What does this mean? There are many large stores such as Wal-Mart, Target, Kohl’s, in this industry. A few large stores account for a significant portion of industry sales. There is cut-throat competition in this industry because there are no entry barriers. The sales volume in this industry is consistently high.Points Received:1 of 1Comments:Question 9.Question :A reason why there is more competition among restaurants than among large discount department stores is that restaurants have to cater to a variety of consumer tastes while department stores do not. unlike department stores, have to abide by government sanitation rules. unlike department stores, do not have significant economies of scale. have more elastic demand for their product compared to department stores.Points Received:1 of 1Comments:Question 10.Question :A key part of Sam Walton’s business strategy for Wal-Mart involved placing stores in small towns where the main competition was from small, locally owned stores. What is the rationale behind this strategy? to increase consumer welfare by offering consumers in small towns a wider variety of goods and services to create employment opportunities for those living in small towns to maintain a competitive edge – small stores cannot compete with Wal-Mart’s prices because Wal-Mart is able to pass to consumers some of its cost savings from economies of scale locating in small towns requires a lower financial outlay than locating in big citiesPoints Received:Comments: * Times are displayed in (GMT-07:00) Mountain Time (US & Canada)
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