03 Jun Question 1. Verizon Wireless, AT&T, T-Mobiles and Sprint together provide over 90% cellphone services in the US wireless voice & data market
Question
1. Verizon Wireless, AT&T, T-Mobiles and Sprint together provide over 90% cellphone services in the US wireless voice & data market. Each of these service providers spends hundreds of millions of dollars a year on television advertising to promote their coverage and quality of voice, video and data services. Obviously, if one company is advertising its service quality heavily, the other must also advertise to protect their customer base (market share). The similar situation applies to US based major beer companies such as Budweiser (now owned by a Belgium based beer company called InBev), Miller and Coors who together produce 85% of all beer consumed in the US, each spend well over $250 million a year on television advertising campaigns.
Do you think these firms would welcome congressional legislation which restricted the amount that any one firm could spend on advertising to $1 million yearly, and thereby allowed them all to drastically reduce their costs (and thus increasing profits) without fear of losing ground to each other? Explain your answer in both cases..
2. Assume the graph below represents the market demand for a patented prescription drug together with the long run marginal cost and average cost functions for producing the drug. (note: the diagram assumes that at output levels over 50 million AFC ~ 0, and MC is constant so that ATC = AVC =MC = $20)
A) Draw the marginal revenue function for this firm.
B) What is the profit maximizing price for this firm?
C) On the graph show the area which represents the net loss to society resulting from the monopoly power conferred by the patent.
D) What do you predict will happen to the structure of competition and to the price in this market when the patent expires ? (Hint: use the concept of “Minimum efficient scale ” of production in your answer.)
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.