# econ questions 10

Parking Lot Optimization

Suppose your elasticity of demand for your parking lot spaces is -2, and your price is \$8 per day.If your MC is zero, and your capacity is 80% full at 9:00 A.M. over the last month, are you optimizing?Why or why not?

A City and Its Unions

Robert G. Flanders Jr., the state-appointed receiver for Central Falls, RI, said his citys declaration of bankruptcy had proved invaluable in helping it cut costs. Before the city declared bankruptcy, he said, he had found it impossible to wring meaningful concessions out of the citys unions and retirees who were being asked to give up roughly half of the pensions they had earned as the city ran out of cash. Why does bankruptcy give the city bargaining power against its unions?

What would efficient revenue management imply for the pricing of the Cowboys Stadium parking lot on typical game days? How about for the Super Bowl? How about for the many smaller events that fill less than half the lot?

Concert Prices

Increasing Customer Value

To increase a companys performance, a manager suggests that the company needs to increase the value of its product to customers. Describe three ways in which this advice might be incorrect (Hint: Think about what else might or might not change that affects profit.)

Intangible Resources

Why might intangible resources like human capital and intellectual assets be a more likely source of sustainable competitive advantage than tangible resources?

Five Forces and the Airline Industry

Examine the U.S. passenger airline industry using the Five Forces model. Is this an attractive industry? Why or why not?

To Vote or Not to Vote

Mr. and Mrs. Ward typically vote oppositely in elections and so their votes cancel each other out.They each gain two units of utility from a vote for their positions (and lose two units of utility from a vote against their positions). However, the bother of actually voting costs each one unit of utility. Diagram a game in which they choose whether to vote or not to vote.

To Vote or Not to Vote Part II

Suppose Mr. and Mrs. Ward agreed not to vote in tomorrows election. Would such an agreement improve utility? Would such an agreement be an equilibrium?

*Entry Game With Withdrawal

In the text, we considered a sequential-move game in which an entrant was considering entering an industry in competition with an incumbent firm (Figure 15.1). Consider now that the entrant, if fought, has the possibility of withdrawing from the industry (at a loss of 1 for the entrant and a gain of 8 for the incumbent), or staying (at a loss of 5 for each player). What is the equilibrium of this game? Discuss if the entrant is better off with or without the ability to withdraw.

Youve entered into a contract to purchase a new house, and the closing is scheduled for next week. Its typical for some last-minute bargaining to occur at the closing table, where sellers often try to tack on extra fees. You have three options for the closing: (1) attend yourself, (2) send an attorney authorized to close only per the previously negotiated terms, or (3) pre-sign all the closing documents per the current terms and not attend the closing. Which of these would be most advantageous from a bargaining position?