Economics Discussion

question 1 can answer normally include citations

Describe how goals, constraints, incentives, and market rivalry affect economic decisions.

Evaluate and present the economic basis for limit pricing, and identify the conditions under which a firm can profit from such a strategy.

You are the owner of a local car dealership. Unlike other dealerships in the area, you take pride in your “no-haggle” sales policy. Last year, your dealership earned record profits of one million. In your market, you compete against two other dealers, and the market-level price elasticity of demand for midsized Honda automobiles is −1.5. In each of the last five years, your dealership has sold more midsized automobiles than any other dealership in the nation. This entitled your dealership to an additional 20 percent off the manufacturer’s suggested retail price (MSRP) in each year. Taking this into account, your marginal cost of a midsized automobile is $12,000.

● What price should you charge for a midsized automobile if you expect to maintain your record profits

question 2 APA format include citations

CLO #1 – Describe how goals, constraints, incentives, and market rivalry affect economic decisions.

CLO #5 – Investigate the conditions under which a firm operates as perfectly competitive, monopolistically competitive, or a monopoly.

CLO #6 – Explain how beliefs and strategic interaction shape optimal decisions in oligopoly environments.

The Federal Communications Commission (FCC) has hired you as a consultant to design an auction to sell wireless spectrum rights. The FCC indicates that its goal of using auctions to sell these spectrum rights is to generate revenue. Since most bidders are large telecommunications companies, you rationally surmise that all participants in the auction are risk neutral. Which auction type—first-price, second-price, English, or Dutch—would you recommend if all bidders value spectrum rights identically but have different estimates of the true underlying value of spectrum rights? Develop your response in a 2 to 4 page APA formatted paper.