ALOT!! I NEED IT NOW URGENTLY? CASE 1
PACIFIC COPPER INDUSTRY
Pacific copper industry, a family-owned business, produces copper that is
purchased by other firms to make wire, tubing and sheets. The copper is
produced in 1000 pounds ingot and is identifiable as having been produced by
Pacific copper only by the firm’s name stamped on each ingot (brick).
PART 1
Pacific operates the only copper mine and smelter in the South Pacific region.
Because imports are limited by high transportation costs, the firm is essentially a
monopoly with respect to the sale of copper ingots. The only real source of
competition comes from scrap copper that has been melted back into ingot form.
However, this scrap copper is considered inferior by buyers and sells for a
substantially lower price.
Pacific copper sells to approximately 200 firms in the region. Individual
purchases are typically made by experienced buyers, but orders tend to be small
and frequent to allow buyers to keep their inventory cost down. Although Pacific
maintain a publish list of prices, it is not uncommon for preferred customers to be
secretly quoted a lower price or better credit terms.
Management estimates the demand for the firm’s product is given by the
following equation.
P = 2975 – 0.10Q
Where P is the price per ton and Q is the number of tons sold per year.
Regression analysis suggests that the firm’s average and marginal cost equation
are:
AC = 2393 – 0.10Q
MC = 2393 – 0.05Q
Where, AC and MC are average and marginal costs per ton.
PART 2
After 2 years, eight new firms enter the market. At the present time, Pacific has a
50% share of copper ingot sales and the rest of the market is shared equally by
the eight new firms. During a recreational outing in ALASKA, the managers of the
nine copper producing firms decide to collude and set the price of ingot at the
monopoly level.
Read the above case study carefully and write down the correct option
number (e-g A, B, C, D) in the given Excel file.
1- If the objective of Pacific management is short run profit maximization
then the optimal level of output for the Pacific firm is:
Marks: 5
A. 3,798
B. 3,880
C. 3,910
D. 4,005
2- The optimal level of price for the Pacific firm is:
Marks: 2
A. $2,587
B. $2,592
C. $2,602
D. $2,680
3- The amount of total cost of producing copper ingot by the Pacific firm is:
Marks: 3
A. $76, 82,220
B. $77, 00,997
C. $77, 79,400
D. $78, 99,009
4- The amount of total revenue earned by the Pacific firm is:
Marks: 2
A. $1,00,16,280
B. $1,00,36,500
C. $1,00, 37,560
D. $1,01, 56,820
5- The amount of total profit earned by the Pacific firm is:
Marks: 2
A. $20, 01,520
B. $20, 50,205
C. $21, 25,350
D. $22, 58,160
6- Periodically, Pacific advertises in local business publications.
Advertising cost of Pacific firm is estimated to be $1000 per year. What will
be the impact of this advertising cost on the price level of copper ingot?
Marks: 1
A. The price level of copper ingot will rise.
B. The price level of copper ingot will fall.
C. The price level of copper ingot will remain the same.
D. The price level of copper ingot will rise first and then fall.
7- When the nine firms decide to cooperate with each other in the setting of
prices and quantities, this is an example of:
Marks: 1
A. Collusion.
B. Price leadership.
C. Monopolistic competition.
D. Perfect competition.
8- According to the demand function estimated by the Pacific management,
which of the following statements is TRUE about the demand curve for
copper ingot?
Marks: 1
A. Demand curve is upward-sloping.
B. Demand curve is downward-sloping.
C. Demand curve is vertical.
D. Demand curve is horizontal.
9- For a monopolist, changes in demand will lead to changes in:
Marks: 1
A. Price with no change in output.
B. Output with no change in price.
C. Both price and output.
D. None of the given options.
10- Use the following two statements to answer this question:
I. For a monopolist, at every output level, average revenue is equal to
price.
II. For a monopolist, at every output level, marginal revenue is equal to
price.
Marks: 1
A. Both I and II are true.
B. I is true, and II is false.
C. I is false, and II is true.
D. Both I and II are false.
11- Which of the following is NOT true for monopoly?
Marks: 1
A. The profit maximizing output is the one at which marginal revenue and
marginal costs are equal.
B. The profit maximizing output is the one at which the difference between
total revenue and total cost is largest.
C. The monopolist's demand curve is the same as the market demand curve.
D. At the profit maximizing output, price equals marginal cost.
CASE 2
THE MARKET FOR HUMAN KIDNEYS
Should people have the right to sell parts of their bodies? Congress believes the
answer is no. In 1984; it passed the National Organ Transplantation Act, which
prohibits the sale of organs for transplantation. Organs may only be donated.
Although the law prohibits their sale,
PACIFIC COPPER INDUSTRY
Pacific copper industry, a family-owned business, produces copper that is
purchased by other firms to make wire, tubing and sheets. The copper is
produced in 1000 pounds ingot and is identifiable as having been produced by
Pacific copper only by the firm’s name stamped on each ingot (brick).
PART 1
Pacific operates the only copper mine and smelter in the South Pacific region.
Because imports are limited by high transportation costs, the firm is essentially a
monopoly with respect to the sale of copper ingots. The only real source of
competition comes from scrap copper that has been melted back into ingot form.
However, this scrap copper is considered inferior by buyers and sells for a
substantially lower price.
Pacific copper sells to approximately 200 firms in the region. Individual
purchases are typically made by experienced buyers, but orders tend to be small
and frequent to allow buyers to keep their inventory cost down. Although Pacific
maintain a publish list of prices, it is not uncommon for preferred customers to be
secretly quoted a lower price or better credit terms.
Management estimates the demand for the firm’s product is given by the
following equation.
P = 2975 – 0.10Q
Where P is the price per ton and Q is the number of tons sold per year.
Regression analysis suggests that the firm’s average and marginal cost equation
are:
AC = 2393 – 0.10Q
MC = 2393 – 0.05Q
Where, AC and MC are average and marginal costs per ton.
PART 2
After 2 years, eight new firms enter the market. At the present time, Pacific has a
50% share of copper ingot sales and the rest of the market is shared equally by
the eight new firms. During a recreational outing in ALASKA, the managers of the
nine copper producing firms decide to collude and set the price of ingot at the
monopoly level.
Read the above case study carefully and write down the correct option
number (e-g A, B, C, D) in the given Excel file.
1- If the objective of Pacific management is short run profit maximization
then the optimal level of output for the Pacific firm is:
Marks: 5
A. 3,798
B. 3,880
C. 3,910
D. 4,005
2- The optimal level of price for the Pacific firm is:
Marks: 2
A. $2,587
B. $2,592
C. $2,602
D. $2,680
3- The amount of total cost of producing copper ingot by the Pacific firm is:
Marks: 3
A. $76, 82,220
B. $77, 00,997
C. $77, 79,400
D. $78, 99,009
4- The amount of total revenue earned by the Pacific firm is:
Marks: 2
A. $1,00,16,280
B. $1,00,36,500
C. $1,00, 37,560
D. $1,01, 56,820
5- The amount of total profit earned by the Pacific firm is:
Marks: 2
A. $20, 01,520
B. $20, 50,205
C. $21, 25,350
D. $22, 58,160
6- Periodically, Pacific advertises in local business publications.
Advertising cost of Pacific firm is estimated to be $1000 per year. What will
be the impact of this advertising cost on the price level of copper ingot?
Marks: 1
A. The price level of copper ingot will rise.
B. The price level of copper ingot will fall.
C. The price level of copper ingot will remain the same.
D. The price level of copper ingot will rise first and then fall.
7- When the nine firms decide to cooperate with each other in the setting of
prices and quantities, this is an example of:
Marks: 1
A. Collusion.
B. Price leadership.
C. Monopolistic competition.
D. Perfect competition.
8- According to the demand function estimated by the Pacific management,
which of the following statements is TRUE about the demand curve for
copper ingot?
Marks: 1
A. Demand curve is upward-sloping.
B. Demand curve is downward-sloping.
C. Demand curve is vertical.
D. Demand curve is horizontal.
9- For a monopolist, changes in demand will lead to changes in:
Marks: 1
A. Price with no change in output.
B. Output with no change in price.
C. Both price and output.
D. None of the given options.
10- Use the following two statements to answer this question:
I. For a monopolist, at every output level, average revenue is equal to
price.
II. For a monopolist, at every output level, marginal revenue is equal to
price.
Marks: 1
A. Both I and II are true.
B. I is true, and II is false.
C. I is false, and II is true.
D. Both I and II are false.
11- Which of the following is NOT true for monopoly?
Marks: 1
A. The profit maximizing output is the one at which marginal revenue and
marginal costs are equal.
B. The profit maximizing output is the one at which the difference between
total revenue and total cost is largest.
C. The monopolist's demand curve is the same as the market demand curve.
D. At the profit maximizing output, price equals marginal cost.
CASE 2
THE MARKET FOR HUMAN KIDNEYS
Should people have the right to sell parts of their bodies? Congress believes the
answer is no. In 1984; it passed the National Organ Transplantation Act, which
prohibits the sale of organs for transplantation. Organs may only be donated.
Although the law prohibits their sale,