Does a firm maximize profits today or the present value of the profit stream? How far out does a firm look to determine its profit stream? If a CEO could be fired at any time for poor performance, why would he focus on the long term rather than the short term?
Answer to relevant QuestionsAlthough water is essential to life no matter where one lives, the demand for water differs across regions. In one study it was found that the price elasticity of demand for water in all regions of the United States ranged ...Explain why the price elasticity of demand is negative. What would the price of demand be for a “prestige good,” one for which quantity purchased increases a price increases? How do you reconcile these two statements?The thing a lot of people don’t understand about e-commerce is the degree to which it is a scale business,” says Jeff Bezos, CEO of Amazon.com. Where a conventional retailer might have to double its capital spending to ...Draw a perfectly elastic demand curve on top of a standard U-shaped average total cost curve. Now add in the marginal cost and marginal revenue curves. Find the profit maximizing point, MR = MC. Indicate the firm’s total ...Stargazer Recordings sells compact discs in two markets. The marginal cost of each disc is $2. Demand in each market is given by Q1 = 40 – 10P1 and Q2 = 40 – 2P2 where Q is thousands of compact discs. If the firm uses ...
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