BUSINESS COLLEGE

In the initial Cournot duopoly equilibrium, both firms have constant marginal costs, m, and no fixed costs, and there is a barrier to entry. Show what happens to the best-response function of firms if both firms now face a fixed cost of F Let market demand be p-a -bQ, where a and b are positive parameters with 2 firms. Let q1 and q2 be the amount produced by firm 1 and firm 2, respectively. Assuming it is optimal for the firm one to produce, its best-response function is I. (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. Eg., a subscript can be created with the- q1 = character.)

Answers

Answer 1
Answer:

Answer:

The best response functions are given by

q_1=(a-m)/(2b)-(q_2)/(2)

q_2=(a-m)/(2b)-(q_1)/(2)

Explanation:

Under no fixed costs the total costs is

CT_i= mq_i

for i=1,2. The market demand is given by

p=a-bQ

where Q=q_1+q_2 is the total production

Firm 1 and 2 will maximize its own profits. Since this firms are symmetric the problems are too

max\,\Pi_1=p=(a-b(q_1+q_2))q_1-mq_1

The first order conditions (take derivative of the profit with respect to q_1 are given by

a-2 b q_1-b q_2-m=0

Then the best-response function for Firm 1 will be

q_1=(a-m)/(2b)-(q_2)/(2)

and the solution for Firm 2 would be the symmetric

q_2=(a-m)/(2b)-(q_1)/(2)

Now we can add fixed costs, so total costs now look

CT_i= F+mq_i  for i=1,2

the profit maximization problem for firm 1 looks now

max\,\Pi_1=p=(a-b(q_1+q_2))q_1-F-mq_1

The first order conditions are given by

a-2 b q_1-b q_2-m=0

note that this equation is the same as in the absence of Fixed Costs. So the solutions would be the same. Fixed costs don't change the optimal level of production of these firms.

Note that Total Costs are given by fixed costs (F) and marginal costs (m) that depend on the production level of the firm

CT_i=F+mq_i

for i=1,2. The market demand is given by

p=a-bQ

where Q=q_1+q_2 is the total production, so it's the sum of each firms production

Firm 1 will maximize it's own profits

max\,\Pi_1=p=(a-b(q_1+q_2))q_1-F-mq_1

The first order conditions (take derivative of the profit with respect to q_1 are given by

a-2 b q_1-b q_2-m=0

Then the best-response function for Firm 1 will be

q_1=(a-m)/(2b)-(q_2)/(2)

and the solution for Firm 2 would be symmetric.

Note that only marginal costs are relevant for getting the best-response function, so adding fixed costs (F) don't change the results

Explanation:

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Carla incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following values and adjusted bases:FMV Adjusted basis
Inventory $35,750 $10,100
Building 153,000 106,500
Land 291,750 375,000
Total $480,500 $491,600
The corporation also assumed a mortage of $153,750 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $320,750.
Required:
a. What amount of gain or loss does Carla realize on the transfer of the property to the corporation?
b. What amount of gain or loss does Carla recognize on the transfer of the property to the corporation?
c. What is Carla's basis in the stock she receives in her corporation?

Answers

Answer:

a. The amount of loss does Carla realize on the transfer of the property to the corporation is -$17,100

b. Carla does not recognized any gain or loss on the transfer of the property to the corporation

c. The amount of Carla's basis in the stock she receives in her corporation is $337,850

Explanation:

a. In order to calculate the amount of gain or loss does Carla realize on the transfer of the property to the corporation we would have to use the following formula:

amount of gain or loss=Fair market value of stock received+morgage assume by corporation-Adjusted tax basis of the property transferred

amount of gain or loss=$320,750+$153,750-$491,600

amount of gain or loss=-$17,100

The amount of loss does Carla realize on the transfer of the property to the corporation is -$17,100

b. Carla does not recognized any gain or loss on the transfer of the property to the corporation because the requirements are met and no boot is received in exchange.

c. In order to calculate the amount of Carla's basis in the stock she receives in her corporation we would have to use the following formula:

amount of Carla's basis in the stock=Adjusted tax basis of the property transferred-morgage assume by corporation

amount of Carla's basis in the stock=$491,600-$153,750

amount of Carla's basis in the stock=$337,850

The amount of Carla's basis in the stock she receives in her corporation is $337,850

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Answers

1. yes it is a competitive market because it meets all the assumptions of being a competitive market

2. no because there is no free entry in the market

3. no because there are only limited sellers in the market

4. no because the product is not homogeneous.

Explanation:

Competitive market is a kind of market which has in it various sellers involved who are selling the same kind of product that is the product in the competitive market is homogeneous in nature.

The entry and the exit of the sellers in this kind of market is not restricted and they are allowed to have free entry and exit in the market. The number of sellers is also large.

Equipment was purchased for $300,000. Freight charges amounted to $14,000 and there was a cost of $40,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $60,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be:________. a. $70,800 b. $58,800 c. $49,200 d. $48,000

Answers

Answer:

b)

Annual Depreciation expense= $58,800

Explanation:

According to International Accounting standards(IAS) 16 property plan and equipment (PPE), the cost of an asset is the purchase cost plus other costs of bringing it to the intended working conditions.

So we will add the purchase cost to installation  , freight charges.

Cost of assets = 300,000 + 14,000 + 40,000 =$354,000

Annual depreciation = (Cost - Scrap Value)/ Number of years

                                   = (354,000 - 60,000)/5

                                 =$58,800

Annual Depreciation expense= $58,800

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Answers

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What is market strategies?

A marketing strategy is a long-term plan for attaining a business' objectives through an understanding of client needs and the development of a distinct and long-lasting competitive advantage. It includes everything, from choosing which channels to utilize to contact your customers to figuring out who they are.

Product, pricing, place, and promotion make up the four Ps. They serve as an illustration of a "marketing mix," or the collection of tools and techniques utilized by marketers to accomplish their marketing goals.

Thus, You would figure out the most cost-effective approach to send perishables back and forth.

For more information about market strategies, click here:

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Answer:

you would determine the best way to ship perishables back and forth with the most financial advantages. you would need to know what purification would sell best to this group of income levels. what the needs for varies products most cost effective and needed that would also call for further purification need. you would want to tap into a reliable overnight delivery carrier that gives the lowest corporate incentives to use

Assume that your credit sales for March was $12,764,for April was $27,406 and May was $28,706. If credit sales are collected 55% during the month of sale, 25% the month following the sale, and 15% in the second month following the sale, what is the total expected cash collections to be received in May? Round your answer to one dollar.

Answers

Answer:

Total expected cash collections for May are $24554

Explanation:

The May's cash collections will include collections from March's credit sales worth 15% of March's sales, collections for April's credit sales worth 25% of April's credit sales and collections worth 55% of t=May's credit sales. Thus the collections are,

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Collection for April's sales = 27406 * 0.25 = $6851.5

Collection for May's sales = 28706 * 0.55 = $15788.3

Total expected cash collections for May = 1914.6  +  6851.5  +  15788.3

Total expected cash collections for May = $24554.4 rounded off to $24554

Xenon Tech acquired a patent on January 1st, 2013, for $26,400. The patent was estimated to have a useful life of 12 years. On July 1st, 2017, the company incurred legal fees of $6,000 to successfully defend the patent in an infringement suit. How much amortization expense will Xenon Tech recognize on the Income Statement for the year ended December 31st, 2017?

Answers

Answer:

The amount that will recognize under amortization expenses is $2600.

Explanation:

The first step here would be to calculate the amortization expenses for the first 4 years of the patent, here will use straight line depreciation method,

Formula - original value of asset / useful life in years

              - $26,400 / 12

             - $2200

Now for the 4 years this amount would become $2200 x 4 = $8800

The amount of amortization for the first half of 2017 ( up to 30 June ) would be-

= half of full year expenses

= $2200 / 2

= $1100

So up to 30 June 2017, the expenses are $9900 ( $8800+$1100), So the new book value would be = $26,400 - $9900

            = $16,500

In this $16,500 we will add the amount of legal fees, so the total would be -

$16,500 + $6000

= $22,500

The next step is to divide this value by remaining useful; years which is 7.5,

$22,500 / 7.5

= $3000

Now we will divide this amount by 2 because we have to take out expense for remaining last 6 months of 2017

$3000 / 2

= $1500

Adding the expenses for first and second half of 2017 to take out total amortization expense of 2017 -

$1100 + $1500

= $2600
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