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 72 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

ryhom

  • Member
  • Posts: 366
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

Before a vaccine is licensed in the USA, the Food and Drug Administration (FDA) reviews it for safety and effectiveness. The CDC then reviews all studies again, as well as the American Academy of Pediatrics and the American Academy of Family Physicians. Every lot of vaccine is tested before administration to the public, and the FDA regularly inspects vaccine manufacturers' facilities.

Did you know?

The largest baby ever born weighed more than 23 pounds but died just 11 hours after his birth in 1879. The largest surviving baby was born in October 2009 in Sumatra, Indonesia, and weighed an astounding 19.2 pounds at birth.

Did you know?

There used to be a metric calendar, as well as metric clocks. The metric calendar, or "French Republican Calendar" divided the year into 12 months, but each month was divided into three 10-day weeks. Each day had 10 decimal hours. Each hour had 100 decimal minutes. Due to lack of popularity, the metric clocks and calendars were ended in 1795, three years after they had been first marketed.

Did you know?

A headache when you wake up in the morning is indicative of sinusitis. Other symptoms of sinusitis can include fever, weakness, tiredness, a cough that may be more severe at night, and a runny nose or nasal congestion.

Did you know?

In the United States, there is a birth every 8 seconds, according to the U.S. Census Bureau's Population Clock.

Examples of Impacts Associated with Different Amounts of Global Average Temperat Examples of Impacts Associated with Different Amounts of Global Average Temperat
Total allowable and actual catch, Grand Bank Atlantic Cod 1959 -2012 Total allowable and actual catch, Grand Bank Atlantic Cod 1959 -2012
Power of Positivity Power of Positivity
Finding the derivative using the power rule - Solutions Finding the derivative using the power rule - Solutions
The cube of insulating material shown in the figure has one corner at the origin. Each side of ... The cube of insulating material shown in the figure has one corner at the origin. Each side of ...
Figure 2.15.jpg Figure 2.15.jpg
Video: Regulation of GFR: three methods, autoregulation & autoregulation via myogenic mechanism

For a complete list of videos, visit our video library