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Ronch [10]
2 years ago
11

Suppose that McDonalds and Yum Brands are the sole producers of a quadruple-decker chicken and hamburger sandwich. The two firms

currently charge the same price for their products. If neither firm reduces the price of its quadruple-decker chicken and hamburger sandwich, each firm earns $40 million in profit. If both firms reduce their prices, then each firm will earn $9 million in profit. If one firm reduces its price and the other does not, then the firm that reduces price will earn a profit of $70 million while the other firm will earn a profit of $2 million.
Assuming that collusion is not a possibility, the Nash equilibrium occurs when
Business
1 answer:
tino4ka555 [31]2 years ago
6 0

Answer:

Both companies will reduce their prices.

Explanation:

Given that collusion is not possible between McDonald's and Yum, both companies will try to earn more money by reducing their prices and increasing their profits to $70 million. They will do this hoping that the other firm doesn't modify its pricing strategy.

You might be interested in
A company had the following cash flows for the year:
BaLLatris [955]

Answer:

$35,000 (inflow)

Explanation:

Net investing cash flows is computed as follows;

Inflow:

Issued common stock $75,000

Sold equipment 40,000

Total $115,000

Less: outflow

Purchased land $60,000

Paid dividends 20,000

Total outflow $80,000

——————

Net investing cash flows $35,000

*positive cash flows (inflow is greater than outflow) will increase the amount cash of the company

*proceeds from the bank classified as financing activity

*paid employees and sold services to customers are fall under operating activities

3 0
3 years ago
"Moyas Corporation sells a single product for $10 per unit. Last year, the company's sales revenue was $280,000 and its net oper
Harlamova29_29 [7]

Answer:

23,750 units

Explanation:

The computation of the break even point in unit sales is shown below

Break even point = (Fixed expenses) ÷ (Contribution margin per unit)

where,  

Contribution margin per unit = Selling price per unit - Variable expense per unit  

The variable expense per unit is

= (Sale revenue - fixed expenses - net operating income) ÷ (Number of sales units)

= ($280,000 - $17,000 - $95,000) ÷ ($280,000 ÷ 10 per unit)

= ($280,000 - $17,000 - $95,000) ÷ (28,000 units)

= $6 per uni

And, the fixed expenses is $95,000

Now put these values to the above formula  

So, the value would equal to  

= ($95,000) ÷ ($10 - $6)  

= 23,750 units

4 0
3 years ago
How does the existence of substitutes affect the price elasticity of demand?A) The existence of substitutes leads to higher pric
choli [55]

Answer:

B) If there are many substitutes, the price elasticity of the good is more elastic.

Explanation:

Price elasticity of demand measures how quantity demanded changes when price level changes.

If there are subsituites for a good, the demand for the good tends to be more elastic - a small change in price leads to a greater change in quantity demanded.

Suppliers would be less motivated to increase prices if there are many close substitutes for its goods.

I hope my answer helps you.

4 0
2 years ago
A bill that deals with such a diverse set of unrelated issues as environmental issues, tax issues, and criminal justice issues i
Leona [35]

A bill that deals with such a diverse set of unrelated issues as environmental issues, tax issues, and criminal justice issues is likely to be an Omnibus bill

<h3>What is an Omnibus Bill?</h3>

An omnibus bill is a bill that covers divers issues which is coupled into one document.

It is a single document which is accepted in a single vote by a legislature but encompasses several measures into one or combines diverse subjects.

Due to their large size and scope, omnibus bills limit opportunities for debate and scrutiny.

Learn more about Omnibus Bill at brainly.com/question/18667507

3 0
2 years ago
10 years with a stated interest rate of 11% and a face value of $500,000. Interest payments are made semi-annually. The market r
IrinaVladis [17]

Answer:= $471,325

Explanation:

Price of a bond = Present value of coupon payments + Present value of face value at maturity

Coupon payments = 500,000 * 11% * 1/2 years = $27,500  

Periodic yield = 12%/ 2 = 6% per semi annual period  

Periods = 10 * 2 = 20 semi annual periods

Coupon payment is constant so it is an annuity.  

Price of bond = Present value of annuity + Present value of face value at maturity  

= (Annuity * Present value interest factor of Annuity, 6%, 20 years) + Face value / (1 + rate) ^ number of periods  

= (27,500 * 11.4699) + 500,000 / (1 + 6%)²⁰  

= $471,325

7 0
3 years ago
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