1. A firm has the following demand and cost equation for a product.
Q = 200 - 5P; P = 40 - 0.2Q and MR = 40 - 0.4Q
TC = 400 + 4Q
a. What are price, quantity and profit for this company?
b. Suppose the original demand shifted to Q = 100 - 5P. If it is a firm under monopolistic competition, what might have happened to this firm in this monopolistic market for such a shift in view?
c. What should the firm do in the face of a new demand equation in the short run and why? Provide a computational basis for your answer.
d. What kind of strategies should the firm to consider for the long run, assuming that the firm did not do much after the shift in (b)?
e. Now, Q = 400 - 10P with P = 40 - 0.1Q with the corresponding MR = 40 - 0.2Q & cost equation, TC = 400 + 2Q as a result of operating in a Global Economy. Explain the differences between in demand and cost equations.
f. What are price, quantity and profit for this company as a result of operating in global economy?
g. How did operating in a global open economy change the situation in terms of price, quantity and profit?
h. Now summarize the differences in three cases, (a), (b) and (c) and explain the impact of global economy in this company.
i. How does this case contrast with the negative impact of "outsourcing" in 1x. and 1y. in Exam #1?
j. It is sometimes said that a firm has to be "lucky" first and then "good." Explain what is meant by this statement.
k. Review the case history of Pepsi' v Coke at the beginning of my lecture note of S and D of Chapters 3 & 4 from Module One. In answering this question, consider why Pepsi was lucky in the first place and was good, which helped Pepsi survive during the depression of the 1930's, after two bankruptcy filings. Google the history of Pepsi v. Coke during the 1930's And then explain the rationale of Pepsi' strategy, which not only helped Pepsi survive and became a major competitor to Coke.