Questions from Managerial Economics


Q: Two firms compete in a homogeneous product market where the inverse demand

Two firms compete in a homogeneous product market where the inverse demand function is P = 20 − 5Q (quantity is measured in millions). Firm 1 has been in business for one year, while firm 2 just recen...

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Q: You are the manager of an international firm headquartered in Antarctica.

You are the manager of an international firm headquartered in Antarctica. You are contemplating a business tactic that will permit your firm to raise prices and increase profits in the long run by eli...

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Q: Between 1995 and 1997, American Airlines competed in the Dallas/

Between 1995 and 1997, American Airlines competed in the Dallas/Ft. Worth Airport against several other low-cost carriers. In response to these low-cost carriers, American Airlines reduced its price a...

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Q: A number of professional associations, such as the American Medical Association

A number of professional associations, such as the American Medical Association and the American Bar Association, support regulations that make it more costly for their members (e.g., doctors and lawy...

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Q: As a newly hired manager at your firm, you decide to

As a newly hired manager at your firm, you decide to start your tenure by assessing the sensibility of your current advertising expenditure. To do this, you ask your analytics team to collect useful d...

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Q: Argyle is a large, vertically integrated firm that manufactures sweaters from

Argyle is a large, vertically integrated firm that manufactures sweaters from a rare type of wool produced on its sheep farms. Argyle has adopted a strategy of selling wool to companies that compete a...

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Q: In 2015 Qualcomm Inc., an American multinational semiconductor company, came

In 2015 Qualcomm Inc., an American multinational semiconductor company, came under scrutiny for its business practices by the United States and the European Union. It was argued that Qualcomm was payi...

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Q: The CEO of a regional airline recently learned that its only competitor

The CEO of a regional airline recently learned that its only competitor is suffering from a significant cash-flow constraint. The CEO realizes that its competitor’s days are numbered but has asked whe...

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Q: Evaluate the following: “Since a rival’s profit-maximizing price

Evaluate the following: “Since a rival’s profit-maximizing price and output depend on its marginal cost and not its fixed costs, a firm cannot profitably lessen competition by implementing a strategy...

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Q: Discuss how price discrimination can enhance the effectiveness of predatory pricing and

Discuss how price discrimination can enhance the effectiveness of predatory pricing and strategies that raise rivals’ costs.

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