Mercedes-Benz of San Francisco advertises on the radio that it has been owned and operated by the same family in the same location for 50 years (as of 2012). It then makes two claims: first, that it has lower overhead than other nearby auto dealers because it has owned this land for 50 years, and second, it charges a lower price for its cars because of its lower overhead. Discuss the logic of these claims.
Answer to relevant QuestionsAccording to the “Oil, Oil Sands, and Oil Shale Shutdowns” Mini-Case, the minimum average variable cost of processing oil sands dropped from $ 25 a barrel in the 1960s to $ 18 due to technological advances. In a figure, ...Beta Laundry’s cost function is C(q) = 30 + 20q + q2.a. What quantity maximizes the firm’s profit if the market price is p? How much does it produce if p = 60? b. If the government imposes a specific tax of t = 2, what ...What is the short-run and long-run effect on firm and market equilibrium of the U. S. law requiring a firm to give its workers six months’ notice before it can shut down its plant?Using a graph similar to figure, show that increasing output beyond the competitive level decreases total surplus because the cost of producing this extra output exceeds the value consumers place on it. If the inverse demand function is p = 500 – 10Q, what is the elasticity of demand and revenue at Q = 10?
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