3. There are three identical firms in the market research industry. The demand is 1- Q, where Q = q1 + q2 + q3. The marginal cost is zero. a. Compute the Cournot equilibrium b. Show that if two of the three firms merge (transforming the industry into a duopoly), the profit of these firms decreases. Explain why and use a table to show the changes. C. Show the result on profits if all three firms were to merge

3. There are three identical firms in the market research industry. The demand is 1- Q, where Q = q1 + q2 + q3. The marginal cost is zero. a. Compute the Cournot equilibrium b. Show that if two of the three firms merge (transforming the industry into a duopoly), the profit of these firms decreases. Explain why and use a table to show the changes. C. Show the result on profits if all three firms were to merge

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter15: Oligopoly And Strategic Behavior

Section: Chapter Questions

Problem 11P

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Question 6 (a) Why is Perfect Competition considered to display high level of economic efficiency? (b) How does monopoly result in a dead-weight loss? Illustrate with diagram. (a) How is oligopoly different from monopolistic competition? (b) Illustrate and explain how the oligopolistic firms determines their collective profit by maximizing price and output levels when they collude and act like a cartel (monopoly). Question 7 (a) What are the main causes of market failure? Give one example and illustrate using a diagram. (b) Explain the difference between private costs and social costs. (c) Government of Country X is considering implementing a tax on fizzy drinks. Using a demand and supply diagram, illustrate what effect the tax will have on the market of fizzy drinks. (d) For what purposes does government use taxes-both at micro and macroeconomic level?
Only typed answer why is the pharmaceutical sector is an example of oligopoly.
Please solve it quickly you can upload handwritten answer also. Consider Atlanta as an oligopoly market with five airlines that behave in a Cournot Model fashion. The Atlanta market demand schedule is: P = 390 - .5*Q. The Cost schedule for Delta is: MC=AC=Scomp=80. The Cost schedule for the other four firms (United, Southwest, et al) is: MC=AC=Scomp=40. What is Delta’s new market share?
1. define the term explicit and implicit costs, give examples 2. to compute econic profit, which cost are used ? 3. explain oligopoly , give examples of oligopoly 4. how firms in oligolpolistic market structure compete , elaborate
10. Based on the available data, the market elasticity of demand for your firm's product is -2.0. The marginal cost is constant at $50 and you compete against 17 other firms in a Cournot Oligopoly The average total costs are $375. What is the optimal price per unit?
Question 1 (40 points) Consider a homogeneous duopoly market where two firms compete in prices. Demand is given by D 8-2p, where p is price. Marginal cost of production is 2. a)lf the individual capacity of both firms is 2, is there an equilibrium in pure strategies? If so, what are the equilibrium prices? If not, provide a proof. b) Consider then that a third firm enters the market and that all three firms have a capacity of 2. Does an equilibrium in pure strategies exist? If so, what are the equilibrium prices? If not, why not? c) Does you answer under b) change if the firms' capacities are respectively equal to 1, 2 and 3?.
Practice Problem 1: Two firms produce homogeneous goods with constant marginal costs c = 2. The market demand in each period is P(Q) =10 - Q where Q is output. (a) Compute Cournot (quantity competition) profits in this market (for which you need to compute output and prices, of course).(b) Compute the monopoly profit in this market. That is, what a firm with the same cost function would make if it were the only one in the market (and what a cartel of the two firms would decide to produce in this market).(c) Suppose that one firm produces half the output that you computed in (b). Compute the best response of the other firm, and explain why in one period an agreement between the two firms to produce each half the monopoly output (and so get half the monopoly profit) would not be honored..
Only typed answer In a duopoly, each firm has marginal cost MC = 100, and market demand is Q = 500 - 0.5p. Assuming average cost is the same as marginal cost. In which oligopoly, Cournot or Stackelberg, do firms have more market power? a. Cournot since the Lerner Index in the Cournot model is twice as much as that in the Stackelberg model. b. Stackelberg since the Lerner Index in the Cournot model is twice as much as that in the Stackelberg model. c. Cournot since the Lerner Index in the Cournot model is about 1.08 times as much as that in the Stackelberg model. d. Stackelberg since the Lerner Index in the Cournot model is about 1.08 times as much as that in the Stackelberg model.
(a) There are two companies in the world that produce large passenger aircraft, Boeing, and Airbus. How would you characterize the market for large passenger aircraft, monopoly, perfectly competitive, monopolistically competitive or Oligopoly? Please explain. Large passenger aircraft are defined as aircraft than can carry more than 150 passengers. (b) The market for telephone services has become more competitive over time with the advancement of technology in the industry. Technology in the aircraft manufacturing industry has also advanced significantly. Why hasn’t this improvement in technology led to an increase in competition (Boeing and Airbus have been the only manufacturers in this industry for many years)? Please explain.
2) There are three identical firms in the market research industry. The demand is 1 – Q, where Q = q1 + q2 + q3. The marginal cost is zero. b. Show that if two of the three firms merge (transforming the industry into a duopoly), the profit of these firms decreases. Explain why and use a table to show the changes.
In relation to degree of concentration, CR4<40%? a. tight oligopoly b. effective competitive c. effective monopoly d. loose oligopoly
1. Write a sentence or two defining the following terms in your own words. Give examples of each. s. Oligopoly t. Induced u. Inelastic Demand