13) Consider two single-malt whiskey distillers, Laphroaig and Knockando. If they advertise, they can both sell more whiskey and increase their revenue. However, the cost of advertising more than offsets the increased revenue so that each distiller ends up with a lower profit than if they do not advertise. On the other hand, if only one advertises, that distiller increases its market share and also its profit. Construct a payoff matrix using the following hypothetical information: If neither distiller advertises, each earns a profit of $35 million per year. If both advertise, each earns a profit of $20 million per year. If one advertises and the other does not, the distiller who advertises earns a profit of $50 million and the distiller who does not advertise earns a profit of $9 million. b. If Laphroaig wants to maximize profit, will it advertise? Briefly explain. If Knockando wants to maximize profit, will it advertise? Briefly explain. d. Is there a dominant strategy for each distiller? Briefly explain. a. C.

If Amazon sells dozens of similar types of pencils at slightly different prices, we might assume the pencil market is _________. Select one: a. an oligopoly. b. a monopolistically competitive market. c. a monopoly. d. a perfectly competitive market.

1. Suppose we live in a world where the widgets market is a monopolistically competitive market with homogenous firms (i.e. no productivity differences among firms). There are two countries: A and B. In each country, consumer demand for widgets can be written as Q = S x- x (P – P), 30 where n is the number of widget firms, P the price of widget charged by the firm, and P the average price of widget by other firms in the market. Moreover, widget firms in both countries have the same total cost function, which is C = 750 + (5 × Q). It is also given that marginal revenue of each 30Q firm can be written as MR = P – Total demand for widget in country A is SA = 900 and Sg = 1600 in country В. a) Derive the average cost function from the total cost function. What is the marginal cost? b) Calculate the number of firms and the prices of widget in each country when trade is not allowed (that is, calculate na, ng, Pa, PBÌ- c) Calculate the number of firms and the price of widget in the unified…

3. Demand for a good produced by a duopoly is given by P = 100 - Q. Both firms have constant marginal costs, MC = 20 and zero fixed costs. Firms can choose to maximize profit or revenue. Suppose firm 1 choose to maximise profit and firm 2 choose to maximise revenue. Determine the equilibrium price and quantity of each firm.

In comparing an oligopolistic firm to a perfectly competitive firm it is generally assumed that the price charged by the competitive firm will be higher than the price charged by the oligopolistic firm. True or False (Explain)

Answering all questions compulsory...

1. Consider a Cournot duopoly with the inverse demand P = 260 - 2Q. Two firms compete choosing their quantities. Both firms have constant. marginal and average cost MC = AC = 20. a. Find each firm's best response function. b. Find the Cournot equilibrium. c. Plot the best response curves and illustrate the equilibrium point.

. What is the Nash equilibrium in this advertising war?a) Coke advertises; Pepsi does not advertise b) Pepsi advertises; Coke does not advertise c) neither of them advertises d) both of them advertise   Explain the reasons for your answer? Was any other equilibrium position possible?                                          advertise                         do not  advertise pepsi-advertise                coke profit=$50B             coke profit =$20B                                          PEPSI profit =$50B            pepsi profit =$100B            do not advertise   coke profit =$100B             coke profit =$80B                                          pepsi profit =$20B              PEPSI PROFIT =$80 B

There is only one provider of electricity in San Diego County - SDGE. They have a lot of power to set prices. They set prices so that margin cost = marginal revenue, Choose.. Choose.. There is one market price for crude oil. In this type of commodity market, every supplier is a price taker Oligopolistic Competition Monopolistic Competition Price Discrimination We often see price wars in the airline industry. In this industry, there are a few big players and they pay attention to their competitors' pricing decisions and are likely to respond accordingly. Monopoly Pure or Perfect Competition Price Fixing In many branded consumer goods markets, there are many sellers each selling over a broad range of prices. Thus, you can get a pair of Fila running shoes for $40 or a pair of Nikes for $80. This type of market is best categorized as Choose.

Compare and contrast the way that monopolistic competitors set price with the way that perfectly competitive firms set price. Also, compare and contrast the short and long run equilibrium in perfect competition and monopolistic competition.