Problem 1:
(a) What are the reasons for the existence of monopoly?
(b) Which of these did Alcoa use to establish and retain a monopoly?
Problem 2:
If the market demand and supply functions for pizza in Newtown were:
QD = 12,000 - 1,000P
QS = -4,000 + 1,000P
Determine algebraically the equilibrium price and quantity of pizza.
The tariff-inclusive price will be $3(1+.33) = $4. What are the impacts of tariff on domestic consumption, domestic production, imports, and government's tariff revenue?
Problem 3: The Halloran Specialty Food Company impost specialty foods from Europe and pays for imports in euros. The financial officer of the company notices that the dollar/euro exchange rate fluctuates continuously, sometimes even by several percentage points in the course of a few days. (a) What risk does the company face? (b) How can the company cover this risk?