Suppose that Firm ABC currently has a market share of 8 percent. Firm XYZ has a market share of 12 percent. What will happen to the Herfindahl-Hirschman index if the two firms merge? Show your work.
What will be an ideal response?
Ques. 2Suppose that when the price of hamburgers increases, the Ruiz family increases their purchases of hot dogs. To the Ruiz family
A) hamburgers and hot dogs are normal goods. B) hamburgers and hot dogs are substitutes.
C) hamburgers and hot dogs are inferior goods. D) hamburgers and hot dogs are complements.
Ques. 3Suppose that a hurricane destroys part of the tobacco crop in North Carolina.
What willhappen to the price of tobacco? What will happen to the marginal product of tobacco field workers as a result of the hurricane? Can we tell what will happen to the demand for tobacco field workers? Explain.
Ques. 4The oldest hamburger chain in the United States is White Castle, which was founded in 1921 . Most of their restaurants in the early days were located in urban areas. In the 1950s they lost much of their business to McDonalds and Burger King.
They were slow to respond in building restaurants on highways and in suburbs. How did the advent of the highway system in the 1950s alter residential location patterns and how might this have affected the marginal revenue product of burger chains in both urban and suburban areas. Why did sales drop off in the urban areas where White Castle had earned its initial success?
Ques. 5Many cities in California have severe land-use laws and ordinances, which effectively takeoff the market large amounts of land for residential or commercial construction.
If the demand for housing increases in these cities without any increase in the stock of housing or commercial buildings then what is the likely impact that this will have on home prices and commercial structures? How might this affect where corporations choose to locate factories?
Ques. 6What does it mean for a good to have a demand-determined price?
What will be an ideal response?
Ques. 7In what way does land differ from other inputs such as labor and capital?
What will be an ideal response?
Ques. 8Script Pro produces robots that are sold to retail pharmacies. Among other things the robotsprint and apply the prescription and auxiliary labels and delivers uncapped vials for final inspection using on-screen drug image verification.
The manager of the pharmacy is trying to calm his workers' fear that their jobs are in jeopardy if he starts using these robots. What economic explanation could the manager use to assuage the fears of his employees that their jobs are in jeopardy.
Ques. 9A firm producing bottled water reports the following production information:
of Workers Total Product
(gallons of water per hour)
0 0
10 1750
20 2750
30 3550
40 4150
50 4550
60 4750
The bottled water sells in a competitive market at a price of 10 cents per gallon. The firm hires workers in a competitive labor market at a wage of 7 per hour. The firm is currently hiring 20 workers and is considering hiring another 10 . What would you recommend the firm do? Why?
Ques. 10A firm producing compact discs reports the following production information:
of Workers Total Product
(boxes of CDs per hour)
0 0
1 125
2 225
3 305
4 365
5 405
6 425
The compact discs sell in a competitive market at a price of 0.20 per box. The firm hires workers in a competitive labor market at a wage of 12 per hour. The firm is currently hiring four workers and is considering hiring a fifth worker. What would you recommend the firm do? Why?
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