answer

watching

views

azuregiraffe45Lv1

28 Sep 2019

Identify the theoretical underpinnings associated with using the profit rate as a measure of market power. What adjustments must be made to report profit rates for economic reasons?

answer

watching

100

views

For unlimited access to Homework Help, a Homework+ subscription is required.

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

Romarie Khazandra MarijuanLv10

28 Sep 2019

Unlock all answers

Get 1 free homework help answer.

Already have an account? Log in

Related questions

One of the reasons economists and managers want to understand a company's economic profit is to determine the market value of a company. Understanding a company's value is important for many reasons, one of which is to determine the company's cost of capital. Why is determining a company's cost of capital important? Consider this in the following discussion.

Review the opening case considering the Cost of Capital, on page 312. Use the information from Chapter 19 to answer the following questions.

Please respond to all of the following prompts in the class discussion section of your online course:

1. What is the best way to measure a firm's performance? Explain your reasoning.

2. Why do managers need to understand the difference between economic profit and accounting profit? Provide an example of economic vs. accounting profit from your own experience.

chocolatecod576

Question 1

The amount of profit that can be achieved using uniform pricing is __________ the profit that can be achieved from price discrimination because of _______.

Select one:

a. greater than; the cost of trying to determine every single consumer's individual demand (willingness to pay) is prohibitively expensive.

b. less than; uniform pricing is more costly so the ATC and AVC curves are higher than they are under price discrimination.

c. equal to; the TR and TC curves are equivalent under either pricing scheme, so there is no profit advantage to either scheme.

d. less than; total demand includes people who would be willing to pay more than, as well as less than, the uniform market price.

Question 2

A firm selling in two markets is practicing price discrimination:

Select one:

a. when it refuses to sell the good to some group of consumers.

b. anytime it charges different consumers different prices.

c. when it charges the same price to different consumers as long as they differ in their demand for the good.

d. when it is charging different consumers, different prices, and the price difference is not based upon cost differences.

Question 3

To successfully practice price discrimination:

Select one:

a. consumers in two separate markets must have identical demand.

b. the firm must possess market power.

c. it must be easy for consumers in one market to sell to consumers in the other market.

d. the firm must be a pure monopoly.

Question 4

If it could practice first-degree price discrimination, a firm with market power could earn:

Select one:

a. its typical monopoly profit as well as the area which, under uniform pricing, would represent the deadweight loss associated with market power.

b. an area half the size of its monopoly power under uniform pricing.

c. its typical monopoly profit as well as the area which, under uniform pricing, would represent consumer surplus.

d. its typical monopoly profit as well as the area which, under uniform pricing, would represent consumer surplus and the deadweight loss associated with market power.