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Kisachek [45]
3 years ago
8

Consider two cigarette companies, PM Inc. and Brown Inc. If neither company advertises, the two companies split the market and e

arn $50 million each. If they both advertise, they again split the market, but profits are lower by $10 million since each company must bear the cost of advertising. Yet if one company advertises while the other does not, the one that advertises attracts customers from the other. In this case, the company that advertises earns $60 million while the company that does not advertise earns only $30 million.
If these two companies collude and agree upon the best joint strategy,
a.neither company will advertise.
b.both companies will advertise.
c.PM Inc. will advertise but Brown Inc. will not.
d.Brown Inc. will advertise but PM Inc. will not.
Business
1 answer:
sdas [7]3 years ago
7 0

Answer: (A)

If both companies collude and agree on the best joint strategy, then neither of them will advertise.

Explanation:

If PM Inc. and Brown Inc. agree on a strategy that is best for both of them, then they would decide not to advertise as this line of action will earn them both $50 million, which is higher than they stand to earn if they both advertise.

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Here are the data for the past 21 months for actual sales of a particular product:LAST YEAR THIS YEARJanuary 325 260February 440
Ronch [10]

Answer:

Fore cadet for fourth quarter us $1085

Explanation:

One Quarter = 3 months

Demand for quarter 1 = 325 + 440 + 450 = 1215

Quarter Demand in Each Quarter Weighted Forecast

1 1215

2 1280

3 1125

4 1610

5 1010

6 1220

7 1055

8 1085

Weighted moving Average Forecast = ((0.25 * 1010) + (0.25 * 1220) + ( 0.5 * 1055) = 1085

Forecast for the fourth quarter is 1085

7 0
3 years ago
The following is cost information for the Creamy Crisp Donut Company:
SCORPION-xisa [38]

Answer:

Given:

Annual lease = $22000

Annual revenue = $380000

Payments = $120000

Utilities = $8000

Value (entrepreneur's talent ) = $80000

Forgone Entrepreneur's interest = $6000

Therefore, we'll first compute the accounting profit using the following formula :

<em>Accounting profit = Annual revenue - Annual lease - Payments - Utilities </em>

<em>Accounting profit = 380000 - 22000 - 120000 - 8000 </em>

<em>Accounting profit =$230000 </em>

Therefore, the economics profit can be evaluated using the following formula:

<em>Economic profit = Accounting profit - Opportunity cost (Salary of entrepreneur) - Value (entrepreneur's talent) - Forgone Entrepreneur's interest</em>

<em>= 230000 - 50000 - 80000 - 6000</em>

<em>= $94000</em>

5 0
3 years ago
In the workplace, you will often write messages that reply directly to requests for information or action. Using the direct mess
salantis [7]

Answer:

Effective direct reply letters usually include a subject line, provide explanation and additional information.

Explanation:

Effective direct reply letters recognize the subject contained in the subject line as well from previous correspondence.  

Effective direct reply letters arrange information in order of priority by listing the most important information first, and make a list of the responses to the questions of the customers in accordance to the order the questions are asked. Graphic devices are employed to ensure that the message can be easily read, and provide assistance to customers by giving then clear reference that will enable them to find additional information.

Finally, a forward-looking statement is usually employed by effective direct reply letters to end pleasantly.  

7 0
3 years ago
What's a good way of understanding capital budgeting in finance
GarryVolchara [31]
Capital budgeting is a step by step process that businesses use to determine the merits of an investment project. The decision of whether to accept or deny an investment project as a part of a company´s growth initiatives, involves determining the investment rate of return that such a project will generate.
3 0
2 years ago
Ebon opened up a small coffee shop which earned him $175,000 in total revenue the first year. To do this, Ebon had to quit his p
sergij07 [2.7K]

Answer:

Ebon's explicit costs are $140,000

Explanation:

Explicit costs are all those which is directly paid to operate the business like wages, material etc. On the other hand implicit cost is the opportunity cost to choose and alternative.

Economic profit is the net of Revenue, Implicit and explicit costs.

Economic profit = Revenue - Explicit cost - Implicit costs

As we know salary earning of the let job is opportunity cost.

$10,000 = $175,000 - Explicit cost - $25,000

$10,000 = $150,000 - Explicit cost

Explicit cost  = $150,000 - $10,000 = $140,000

3 0
2 years ago
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