6. Consider the pharmaceutical sector in the UK, populated by heterogeneous firms, which differ in labour...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
6. Consider the pharmaceutical sector in the UK, populated by heterogeneous firms, which differ in labour productivity, produce subject to increasing returns to scale, and sell under monopolistic competition. Serving the domestic market entails a fixed cost, fp, while exporting to France entails a variable cost T>1 and a fixed cost fx> fp. Suppose that an increase in auditing costs drives the fixed cost of serving the British market up to f = fx. Then: (a) British exporters will make larger profits both in the UK and in France, while small British firms only selling in the UK will sell less and make lower profits (b) British exporters will make the same profits as before both in the UK and in France, while small British firms only selling in the UK will sell as much as before but make lower profits (c) the profits of British exporters will increase in the UK and remain constant in France, while small - British firms only selling in the UK will sell less and make lower profits (d) none of the above 6. Consider the pharmaceutical sector in the UK, populated by heterogeneous firms, which differ in labour productivity, produce subject to increasing returns to scale, and sell under monopolistic competition. Serving the domestic market entails a fixed cost, fp, while exporting to France entails a variable cost T>1 and a fixed cost fx> fp. Suppose that an increase in auditing costs drives the fixed cost of serving the British market up to f = fx. Then: (a) British exporters will make larger profits both in the UK and in France, while small British firms only selling in the UK will sell less and make lower profits (b) British exporters will make the same profits as before both in the UK and in France, while small British firms only selling in the UK will sell as much as before but make lower profits (c) the profits of British exporters will increase in the UK and remain constant in France, while small - British firms only selling in the UK will sell less and make lower profits (d) none of the above
Expert Answer:
Answer rating: 100% (QA)
The detailed answer for the above question is provided below Final Answer The most likely scenario given the increase of fixed serving costs in the do... View the full answer
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
Posted Date:
Students also viewed these economics questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
An inductor has a linear change in current from 50 mA to 100 mA in 2 ms and induces a voltage of 160 mV. Calculate the value of the inductor.
-
Monopoly Power By now you know that monopoly power occurs in most markets. You also know that in some cases, a regulated monopoly produces a better outcome than competition. Yet an inappropriate use...
-
A tube bank uses an aligned arrangement of 30-mm-diameter tubes with ST = SL = 60 mm and a tube length of 1 m. There are 10 tube rows in the flow direction (N L = 10) and 7 tubes per row (NT = 7)....
-
The bar magnet in Figure P29.7 is rotated about an axis that runs perpendicular to the page and passes through the center of the magnet. The magnet rotates with rotational speed \(\omega\). A loop of...
-
Rons, Inc.s inventory records for a particular development program show the following at May 31: At May 31, 10 of these programs are on hand. Journalize for Rons: 1. Total May purchases in one...
-
6. The major components in "Gun Metal" are: (a) Cu, Ni and Fe (b) Al, Cu, Mg and Mn (c) Cu, Sn and Zn 7. 8. Which of the following ore is concentrated using group 1 cyanide salt (a) Calamine (b)...
-
The planet and its moon gravitationally attract each other. Rank the forces of attraction between each pair, from greatest to least. B 2M (2m (2m d 2d
-
The Math 122 Midterm Exam is coming up. Suppose the exam scores are normally distributed with a population mean of 71.4% and a standard deviation of 14.5%. Let's first create a simulation to observe...
-
Explain the strategic importance of product and service design.
-
Giles Corporation adopted a plan of liquidation during September 2018 and subsequently sold its only asset, land, that had a basis of \(\$ 480,000\) to Pat (an unrelated taxpayer) for \(\$ 500,000\)....
-
Develop simple process layouts.
-
Describe process layouts and their main advantages and disadvantages.
-
Tatco's pretax book income and taxable income differ because of one item, warranty expense. Tatco reports a \(\$ 200,000\) warranty expense and a related estimated liability for warranties for...
-
On November 8, 2012, the day of Manulifes third quarter earnings release, the companys share price fell 18 cents to $11.82. On the same day, the S&P/TSX Composite Index fell to 12,197.05 from its...
-
The baseball player A hits the ball from a height of 3.36 ft with an initial velocity of 34.8 ft/s. 0.14 seconds after the ball is hit, player B who is standing 15 ft away from home plate begins to...
-
Suppose you have an income of $100 to spend on goods x1 and x2. A. Suppose that you have homothetic tastes that happen to have the special property that indifference curves on one side of the 45...
-
In exercise 17.9, we considered the case of me trading assets that allow you to transfer consumption from good times to bad times. Suppose again that your income during economic expansions is e E and...
-
In this exercise, we will explore some logical relationships between families of tastes that satisfy different assumptions. A: Suppose we define a strong and a weak version of convexity as follows:...
-
How is financial accounting different from management accounting?
-
As the new controller, reply to the following comment made by your plant manager: When I employ a proper accounting software, which can process all my daily accounting records and provide me with all...
-
How do managers make decisions to implement strategy?
Study smarter with the SolutionInn App