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ECO 500 CHAPTERS 9 AND 10 HOMEWORK

ECO 500 CHAPTERS 9 AND 10 HOMEWORK

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Author: Christine Farr
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Problem 09-11 (Essay, Autogradable))
Ford executives announced that the company would extend its most dramatic consumer incentive program in the company’s long history—the Ford Drive America Program. The program provides consumers with either cash back or zero percent financing for new Ford vehicles. As the manager of a Ford franchise, how would you expect this program to impact your firm’s bottom line?
Problem 09-15 (Essay, Autogradable)
The opening statement on the Web site of the Organization of Petroleum Exporting Countries (OPEC) says its members seek “ . . .to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.”To achieve this goal, OPEC attempts to coordinate and unify petroleum policies by raising or lowering their collective oil production. However, increased production by Russia, Oman, Mexico, Norway, and other non-OPEC countries has placed downward pressure on the price of crude oil. To achieve its goal of stable and fair oil prices, what must OPEC do to maintain the price of oil at its desired level?
Why might this be difficult for OPEC to do?
 
Problem 09-16
Semi-Salt Industries began its operation in 1975 and remains the only firm in the world that produces and sells commercial-grade polyglutamate. While virtually anyone with a degree in college chemistry could replicate the firm’s formula, due to the relatively high cost, Semi-Salt has decided not to apply for a patent. Despite the absence of patent protection, Semi-Salt has averaged accounting profits of 5.5 percent on investment since it began producing polyglutamate—a rate comparable to the average rate of interest that large banks paid on deposits over this period. Does this rate of return indicate that Semi-Salt is earning monopoly profits?
Why are their profits at the level they are?
 


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