管理经济学答案12

266 Chapter 12 Monopolistic Competition: The Competitive Model in a More Realistic Setting 254 1. DVDs Rented per Week (Q) Price (P) Total Revenue (TR = P x Q) Average Revenue (AR = TR/Q) Marginal Revenue (MR = ΔTR/ΔQ) 0 $8.00 0 — — 1 7.50 $7.50 $7.50 $7.50 2 7.00 14.00 7.00 6.50 3 6.50 19.50 6.50 5.50 4 6.00 24.00 6.00 4.50 5 5.50 27.50 5.50 3.50 6 5.00 30.00 5.00 2.50 7 4.50 31.50 4.50 1.50 8 4.00 32.00 4.00 0.50 2. Profit = Revenue – Cost = Quantity x (price – average cost) = 350 x ($3.25 – $3.00) = $87.50. 3a. We need to calculate marginal revenue and marginal cost, which can be done by adding three new columns to the table: DVDs Rented per Week (Q) Price (P) Total Revenue (TR) Marginal Revenue (MR) Total Cost (TC) Marginal Cost (MC) 0 $6.00 0 — $3.00 — 1 5.50 $5.50 $5.50 7.00 $4.00 2 5.00 10.00 4.50 10.00 3.00 3 4.50 13.50 3.50 12.50 2.50 4 4.00 16.00 2.50 14.50 2.00 5 3.50 17.50 1.50 16.00 1.50 6 3.00 18.00 .50 17.00 1.00 7 2.50 17.50 –.50 18.50 1.50 8 2.00 16.00 –1.50 21.00 2.50 Jill should rent five DVDs – this is where MC = MR. She should charge a price of $3.50 per DVD. Her profit will be $17.50 – $16.00 = $1.50. 3b. The marginal revenue from renting the profit-maximizing DVD is $1.50, which is the same as the marginal cost of renting this DVD. 4. Remember that minimizing average costs is not the same as maximizing profits. Often where profits are maximized, average costs are not minimized. In this case, we do not have the information on the firm’s revenues that would be necessary to calculate the profit-maximizing highway speed, nor do we know how other costs – such as labor costs – are related to the average highway speed. All subsequent questions have been renumbered. 5a. She should rent 55 DVDs at a price of $4.50 each. This is the quantity at which MC = MR. 5b. Her loss is equal to the difference between price and average total cost, multiplied by quantity = ($4.50 – $5.50) x 55 = –$55.00. Because the price is greater than her average variable cost, she should continue to operate and not shut down in the short run. 5c. No, because she is taking a loss. If such losses persist, she should exit the industry. 6. Profit = Revenue – Total Cost. Since profit fell, total costs must have increased faster than revenue increased. 7. The drop in profits per car doesn’t necessarily indicate that cutting prices was a bad idea. If GM is maximizing profits, it will set its output where MC = MR and charge the highest price that people are willing to pay for this quantity. It may have been forced to cut its price (and profits per car) because demand fell. Keeping its price at the old level may have caused even greater losses of profit. 8. The graph shows that when the marginal and average total cost curves shift up, the profit-maximizing price rises from P1 to P2. Germano seems to be assuming that demand is perfectly inelastic, which it is unlikely to be. If a publisher does not raise the price of a book following an increase in its production cost, its marginal revenue from the last few copies will be less than the marginal cost – so it will earn a smaller profit than it would at a higher price. 9. The analysis is incorrect. The student has forgotten that economic costs include a normal rate of return on the owners’ investment in the firm. Therefore, firms will not leave the industry when earning zero economic profit. 10. In this context, “making goods in large quantity” means making more than the profit-maximizing quantity – making so many that the marginal cost exceeds the marginal revenue. Producing too many Rolls-Royce automobiles might also ruin their reputation for exclusiveness and ultimately reduce the demand for them. This is not a problem with most products. On the other hand, building a large factory that exhibits diseconomies of scale would be a problem for any firm. 11a. The demand for ordering books online must be price elastic. 11b. P1 is the non-profit-maximizing price Amazon was charging before the price cut. P2 is the profit-maximizing price. 12. Competition in markets results in firms being forced to produce the goods most desired by consumers and keeps most firms from earning more than a normal rate of return in the long run. 13. Few will agree. Firms differentiate their products in order to appeal to consumers’ varied tastes. The success of product differentiation strategies indicates that many consumers find differentiated products preferable to the alternatives. Consumers are, therefore, better off than they would be if companies did not differentiate their products – they are willing to pay for the higher costs (“waste”) caused by differentiation. 14. Consumers gain from the lower prices productivity gains make possible. The firms are not more profitable because competition causes the prices they charge to fall to the level of the average total costs. 15a. Drexler’s strategy will increase J. Crew’s costs, but if it is successful it will also increase demand by enough to increase the company’s profits. 15b. The strategy may be successful in raising J.Crew’s profits in the short run. But barriers to entry in the clothing industry are low, so in the long run there is nothing preventing other companies from copying J. Crew’s strategy, which would leave the company earning zero economic profit. 16. Competition is a risk because it can reduce a firm’s profits. The barriers to entry are low in retailing, so the competition is intense. 17a. Initial revenue = $440 x 500,000 = $220,000,000. Revenue after price cut: $360 x 800,000 = $288,000,000. So, he expected total revenue to rise. 17b. Recall that the midpoint formula uses the average of the initial and final quantity and the initial and final price. The average of the initial and final prices of Model T’s is = $400 and the average of the initial and final quantities is = 650,000. So, the percentage change in the quantity demanded = x 100 = 46.2% and the percentage change in the price = x 100 = -20%. So, the price elasticity of demand for Model T’s = = -2.3. 17c. Profit = Revenue – Cost. $60,000,000 = $288,000,000 – (ATC x 800,000); therefore, to earn a profit of $60,000,000, the ATC for making 800,000 cars must be $285. ATC for 500,000 Model T’s: Total Cost = Revenue – Profit = $220,000,000 – $60,000,000 = $160,000,000. Therefore, ATC = $160,000,000/500,000 = $320. So the ATC of producing 800,000 Model T’s was lower than the ATC of producing 500,000 Model T’s. 17d. Yes. If the profit is the same and he is selling more cars, he must be making a smaller profit per car. We can check this by calculating the profit per car (price minus ATC): For 500,000 cars, profit per car = $440 – $320 = $120 per car; for 800,000 cars, profit per car = $360 – $285 = $75 per car. 18. It will be very difficult to become rich by following the advice found in a book, because if the book really has a good idea, then a lot of people will follow its advice. In the process, they will compete away the profits from following the advice. Only those who pounce on the profit opportunity quickly will earn great profits before imitators enter the market and eliminate the profits. (In addition, if the author’s advice is really that valuable, he or she will probably want to keep it secret, using it in his or her own business rather than telling rivals about it.) 19. Advertising is a fixed cost, so it will shift up the ATC curve, but not the MC curve. 20. This is a good way to find out what customers want, but it probably isn’t a good way to make a profit because other firms already know this same information and are selling products to these customers. Entering the market with products exactly like the competition will only work if your firm somehow has lower costs than the other firms. On the other hand, firms who discover new information about what customers want can temporarily make a profit supplying it until new firms enter the market and competition drives profits back to zero. 21. Once a firm’s image is tarnished, it can be very expensive to improve the situation. Advertising and law suits may help, but they can be very expensive. Another famous example of a product image mishap is Reebok’s Incubus running shoes for women. Reebok was surprised to learn that in medieval legend an incubus was a male demon who preyed on sleeping women. After a big frenzy in the press, Reebok changed the shoe line’s name. 22. The skeptics who think that “Starbucks’ game is almost over” think that other firms will soon be copying Starbucks so well that the demand for Starbucks’ products will shrink and it won’t be able to earn high economic profits any more. 248