Bob plans to start an indoor rock-climbing business called Bob’s Bouldering. Bob is deciding whether to install portable climbing equipment that can be easily moved from building to building or fixed equipment that, once installed, cannot be moved without destroying the equipment. The loan to buy the removable equipment will cost Bob $1,000 per month in interest, while the fixed equipment will cost $1,500 per month. However, installing the fixed equipment will generate an additional $800 per month in revenue because climbers prefer it.

He can rent a building for his shop for $5,000 per month. However, the building owner realises that if Bob installs the fixed equipment, he can raise the rent to $5,400 per month because Bob will lose his investment in the equipment if he moves to another building.

To maximise his profit, Bob will _____.

In mid-2020, the spread of COVID-19 led to government-imposed lockdowns as well as lower consumer demand for dining in restaurants in many countries. During this time, the number of waitstaff employed in restaurants fell sharply, but there was little change in wages. As some places ended lockdowns and demand for restaurant dining increased sharply, employment in restaurants increased slowly, but wages began rising. What shifts in supply (S) and demand (D) for labour are consistent with these changes? 

Which of the following best describes 'Monopsony Power"

In Week 8's Individual Core Learning, we discussed decisions related to employee and supplier relations. Reflecting on the stakeholder classification diagram, which of the following statements are true?

Consider the following pay-off matrix for two players with two possible strategies. (Player B’s payoffs and strategies are depicted in italics.)

Which of the following strategy profiles are Nash equilibria?

Helton Hotels, a major hotel chain, and Beautiful Burgers, a popular chain of burger restaurants, have agreed on a joint venture, where Beautiful Burger restaurants will be placed within Helton hotel properties. They each have to decide whether to make a small ($5 million) or large ($10 million) investment in the joint venture. These investments will not be observable by the other party until after the restaurants are opened, at which stage it will be too late to make any changes.

Because their investments in the project are complementary, if both make a large investment, they will earn $40 million in revenue, while if at least one makes a small investment, they will earn only $24 million in revenue from the venture. In either case, they have agreed to split the revenue equally.

Their profits in all possible scenarios is represented by the following pay-off matrix. (Beautiful Burgers’ payoffs and strategies are depicted in italics.)

Which of the following strategy profiles are Nash equilibria of this game?

Which of the following is NOT a prohibitive trade practice under the Part IV of the Competition and Consumer Act 2010  (Cth)? 

You work as the pricing specialist for a large business which has an industry association. Your business usually sells on a wholesale basis. You have good visibility of the price of your products at the retail level compared with your competitors. However, when the industry association publishes a newsletter, you find that your wholesale price is 5% below the average wholesale price for similar items. The industry association does not reveal the wholesale prices charged by specific competitors, only the average (expressed as each of mean and median). The CEO has also seen the newsletter and asks why you have failed to set the “right” wholesale price and when will the price increase occur. Your General Counsel has also seen the newsletter and has suggested that you do not immediately change the price. Why might the General Counsel say this? 

If a person gets a “marker” from the Australian Competition and Consumer Commission (ACCC) in relation to cartel conduct, it means: 

A monopolist has no fixed costs and a constant marginal cost equal to $4 per unit. It faces the following demand schedule:

If this monopolist can perfectly price discriminate, what is the price for the last unit sold?