Practice Problems: 1. A price war: 1A. Consider a pair of duopolists engaged in price competition. Suppose that each duopolist can produce output at a cost of $4 per unit: AC=MC=$4. Furthermore, each firm has only two pricing options: charge a high price of $8 or charge a low price of $6. If both firms set high prices, each can expect to sell 2.5 million units annually. If both set low prices, each firm's sales increase to 3.5 million units. Finally, if one firm sets a high price and the other a low price, the former sells 1.25 million units, the latter 6 million units. Show a payoff table summarizing the profit implications of the firm's different pricing strategies.

Suppose that some consumers display a strong brand allegiance for one firm or the other. Consequently, any price difference between the duopolists is expected to produce a much smaller swing in the firms' market shares. Specifically, suppose that if one firm charges a price of $6 and the other $8, the former sells 4 million units and the latter 2 million instead of the original 6 million and 1.25 million sales). All other facts are as before. How does this change the payoffs? What price should each firm set? Explain.​

The strength of the economy depends on the balance pf production and consumption of goods and consumption of goods and services

Assume that all of thurmond company’s sales are credit sales. it has been the practice of thurmond company to provide for uncollectible accounts expense at the rate of one-half of one percent of net credit sales. for the year 20x1 the company had net credit sales of $2,021,000 and the allowance for doubtful accounts account had a credit balance, before adjustments, of $630 as of december 31, 20x1. during 20x2, the following selected transactions occurred: jan. 20 the account of h. scott, a deceased customer who owed $325, was determined to be uncollectible and was therefore written off. mar. 16 informed that a. nettles, a customer, had been declared bankrupt. his account for $898 was written off. apr. 23 the $906 account of j. kenney & sons was written off as uncollectible. aug. 3 wrote off as uncollectible the $750 account of clarke company. oct. 20 wrote off as uncollectible the $1,130 account of g. michael associates. oct. 27 received a check for $325 from the estate of h. scott. this amount had been written off on january 20 of the current year. dec. 20 cater company paid $7,000 of the $7,500 it owed thurmond company. since cater company was going out of business, the $500 balance it still owed was deemed uncollectible and written off. required: prepare journal entries for the december 31, 20x1, and the seven 20x2 transactions on the work sheets provided at the back of this unit. then answer questions 8 and 9 on the answer sheet. t-accounts are also provided for your use in answering these questions. 8. which one of the following entries should have been made on december 31, 20x1?

Problem 9-5. net present value and taxes [lo 1, 2] penguin productions is evaluating a film project. the president of penguin estimates that the film will cost $20,000,000 to produce. in its first year, the film is expected to generate $16,500,000 in net revenue, after which the film will be released to video. video is expected to generate $10,000,000 in net revenue in its first year, $2,500,000 in its second year, and $1,000,000 in its third year. for tax purposes, amortization of the cost of the film will be $12,000,000 in year 1 and $8,000,000 in year 2. the company’s tax rate is 35 percent, and the company requires a 12 percent rate of return on its films. required what is the net present value of the film project? to simplify, assume that all outlays to produce the film occur at time 0. should the company produce the film?