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Elanso [62]
3 years ago
13

Suppose that Boeing and Rolls-Royce Holdings are the sole producers of a particular jet engine. The two firms currently charge t

he same price for their products. If neither firm reduces the price of its engine, each firm earns $36 million in profit. If both firms reduce their prices, then each firm will earn $10 million in profit. If one firm reduces its price and the other does not, then the firm that reduces its price will earn a profit of $50 million while the other firm will earn a profit of $5 million. If the firms can operate as a cartel, then
Business
1 answer:
Reil [10]3 years ago
3 0

Answer:

each firm reduces its price.

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Select the correct answer. Which statement describes points of difference? A. essential elements of a brand that help it justify
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A study reported that a 10% increase in the price of cigarettes would reduce consumption by 4% in the short-run and by 7.5% in t
Alja [10]

Answer:

Price elasticity of demand shows how much a 1% change in the price of a good or services changes the quantity demanded.

In the short run, a 10% increase in price decreases quantity demanded by 4%

PED short run = % change in price / % change in quantity = 4% / 10% = 0.4

PED long run = % change in price / % change in quantity = 7.5% / 10% = 0.75

Both PEDs are inelastic since they are less than 1, which means that an increase in price will result in a proportionally smaller decrease in the quantity demanded. But the PED in the long run is less inelastic, which means that an increase in price will decrease the quantity demanded more in the long than in the short run.

This happens because smokes consider that cigarettes are a basic necessity, so they are willing to purchase them even if the price increases. But as time passes (long run), more smokers will consider that it is not worth paying that much for cigarettes and will probably quit smoking or at least reduce the number of cigarettes they smoke per day.

8 0
3 years ago
"At that time, the market price of ABC is $44. If the market rises to $58 and the call is exercised (the put expires out the mon
steposvetlana [31]

Answer:

600 loss

Explanation:

The computation of the gain or loss is shown below:

Since on Jan, there is a put option of 45 at $3 and the market rises to $58

So it losses by 13 points i.e

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= 13

Now the total premium points collected is of 7 i.e

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= 6

So for 6 points, the net loss is $600

7 0
3 years ago
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