Case
Cases 3
- Course
- Institution
- Book
Case study book Managerial Economics and Business Strategy of Michael R. Baye, Michael Baye - ISBN: 9780073375687 (economics cases 3)
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
More summaries for
-
Solution Manual for Managerial Economics and Business Strategy 10th Michael Baye, Jeff Prince With Complete Solution.
-
Class notes Economics Managerial Economics and Business Strategy
-
Cases 3 antwoorden
Seller
Follow
yko
Reviews received
Content preview
Case for Instructiecollege 3, Economics 1.2, Bedrijfskunde. From competition tomonopoly.
In this case we study the travel market. Several travel agencies offer their services to the
market. The weekly output of a travel agency is indicated by q and is measured in units of
10 travel kilometers. A travel agency has the following cost function that gives the
weekly costs as a function of the output level q:
1 2
C (q) q 5q 1000
10
The costs consist of a variable part and a fixed part. Within a year, the fixed costs cannot
be avoided. In the long run, the fixed costs can only be avoided by going out of business.
A. Indicate and graph the total costs, the variable costs, and the fixed costs.
B. Determine and graph the marginal costs, the average costs, the average variable
costs, and the average fixed costs.
The supply decision of a travel agency consists of two steps:
(i) The decision to enter or exit the market.
(ii) How many travelling kilometers to supply.
These decisions are both influenced by the market price and by the costs.
C. The entry or exit decision is characterized by the minimum price at which the
travel agency is willing to provide its services to the market. Determine the
minimum price
(a). In the short run (within a period of a year).
(b). In the long run (period longer than a year).
D. (a). Determine the supply curve of a travel agency
(b). Make a graph of the supply curve. In your graph also indicate the point that
characterizes the entry /exit decision.
E. There are 80 travel agencies in the market. This number is fixed in the short run.
They are all identical: they all face the same cost function given above. We
indicate the total market supply by Qs (again expressed in terms of units of 10
kilometers). Determine the market supply curve.
F. The other side of the market consists of the consumers who have a certain demand
for travelling. For the consumers the travel agencies are perfect substitutes: they
don’t care where they book their travel. The market demand curve (obtained by
1
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller yko. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.75. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
72042 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now