Suppose You Manufacture 10 Million Hard Drives Per Year Specifically

question 8

Short Answer

Suppose you manufacture 10 million hard drives per year specifically for Dell laptop computers.Suppose your average variable cost C=$20/unit,annualized cost of investment to build a hard drive factory I=$30 million,and the market price (bailout market price in the event Dell does not buy)Pm=$22/unit.If Dell agrees to purchase the 10 million hard drives at a price P*=$25/unit and the deal subsequently falls apart,what is your company's "quasi-rent"?

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Definitions:

Exhausted

describes a state of extreme tiredness or fatigue, often resulting from physical or mental activity.

Depleted

Reduced in quantity or exhausted; often used in context with natural resources.

Point Source

A single, identifiable source of pollution, such as a pipe or a drain, from which pollutants are discharged.

Pollution

The introduction of contaminants into the natural environment that cause adverse change to air, water, or soil.