This topic contains a solution. Click here to go to the answer

Author Question: Refer to Figure 15-15. Erickson Power is a natural monopoly because A) average total cost is ... (Read 41 times)

james0929

  • Hero Member
  • *****
  • Posts: 586
Refer to Figure 15-15. Erickson Power is a natural monopoly because
 
  A) average total cost is still declining when it intersects demand.
  B) of its continually declining marginal revenue curve as output rises.
  C) it is a power company and all power companies are natural monopolies.
  D) its marginal cost lies entirely below its long-run average cost.

Question 2

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.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

frre432

  • Sr. Member
  • ****
  • Posts: 347
Answer to Question 1

A

Answer to Question 2

a. If the Hard Rock offers Uniguest 1,200 per system, Uniguest will accept the offer because its total profit will increase from 1 million to 1.6 million.
b. If the Hard Rock offers Uniguest 800 per system, Uniguest will accept the offer because its total profit will increase from 1 million to 1.2 million.
c. If the Hard Rock does not believe the threat is credible, it will offer 800 per system and Uniguest will accept the offer, because its profit will still increase form 1 million to 1.2 million.
d. A subgame-perfect equilibrium does exist, and it occurs if the Hard Rock offers 800 per system. If the Hard Rock offers 800 per system, neither the Hard Rock nor Uniguest can make itself better off by changing its decision at any decision node. If the Hard Rock changed its decision and offered 1,200 per system, its additional profit would decline. If Uniguest changed its decision and rejected the 800 offer, its total profit would decline.




james0929

  • Member
  • Posts: 586
Reply 2 on: Jun 29, 2018
Gracias!


ttt030911

  • Member
  • Posts: 315
Reply 3 on: Yesterday
Wow, this really help

 

Did you know?

Between 1999 and 2012, American adults with high total cholesterol decreased from 18.3% to 12.9%

Did you know?

Patients who have been on total parenteral nutrition for more than a few days may need to have foods gradually reintroduced to give the digestive tract time to start working again.

Did you know?

Hypertension is a silent killer because it is deadly and has no significant early symptoms. The danger from hypertension is the extra load on the heart, which can lead to hypertensive heart disease and kidney damage. This occurs without any major symptoms until the high blood pressure becomes extreme. Regular blood pressure checks are an important method of catching hypertension before it can kill you.

Did you know?

Bisphosphonates were first developed in the nineteenth century. They were first investigated for use in disorders of bone metabolism in the 1960s. They are now used clinically for the treatment of osteoporosis, Paget's disease, bone metastasis, multiple myeloma, and other conditions that feature bone fragility.

Did you know?

The oldest recorded age was 122. Madame Jeanne Calment was born in France in 1875 and died in 1997. She was a vegetarian and loved olive oil, port wine, and chocolate.

For a complete list of videos, visit our video library