This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Refer to Figure 15-15. Erickson Power is a natural monopoly because A) average total cost is ... (Read 74 times)

james0929

  • Hero Member
  • *****
  • Posts: 586
on: Jun 29, 2018
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
Reply #1 on: Jun 29, 2018
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
Thanks for the timely response, appreciate it

softEldritch

  • Member
  • Posts: 334
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

Long-term mental and physical effects from substance abuse include: paranoia, psychosis, immune deficiencies, and organ damage.

Did you know?

Your skin wrinkles if you stay in the bathtub a long time because the outermost layer of skin (which consists of dead keratin) swells when it absorbs water. It is tightly attached to the skin below it, so it compensates for the increased area by wrinkling. This happens to the hands and feet because they have the thickest layer of dead keratin cells.

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?

Adolescents often feel clumsy during puberty because during this time of development, their hands and feet grow faster than their arms and legs do. The body is therefore out of proportion. One out of five adolescents actually experiences growing pains during this period.

Did you know?

Though methadone is often used to treat dependency on other opioids, the drug itself can be abused. Crushing or snorting methadone can achieve the opiate "rush" desired by addicts. Improper use such as these can lead to a dangerous dependency on methadone. This drug now accounts for nearly one-third of opioid-related deaths.

Menstrual cycle summary based on a 28-day (average) menstrual cycle. Menstrual cycle summary based on a 28-day (average) menstrual cycle.
Three Mile Island Nuclear Power Plant in PA. Three Mile Island Nuclear Power Plant in PA.
The term “natural,” when used on the packaging of meat and poultry The term “natural,” when used on the packaging of meat and poultry
Cost Accounting: A Managerial Emphasis 16th Edition Cost Accounting: A Managerial Emphasis 16th Edition
An educational institution has total direct labor and material costs of $1964 per student. Its ... An educational institution has total direct labor and material costs of $1964 per student. Its ...
Average quarterly presidential approval rating, from Eisenhower to Trump Average quarterly presidential approval rating, from Eisenhower to Trump
Video: ACTH/Cortisol (glycogenolysis, protein catabolism, lipolysis and gluconeogenesis)

For a complete list of videos, visit our video library