A market with significant barriers to entry and a single price-setting firm. A market with no barriers to entry and a large number of price-taking firms. A market with no barriers to entry and a large number of price-setting firms. A market with significant barriers to entry and a small number of price-setting firms. :: oligopoly :: monopoly : perfect competition :: monopolistic competition
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- Inverse elasticity rule Use the first-order condition (Equation 15.2 ) for a Cournot firm to show that the usual inverse elasticity rule from Chapter 11 holds under Cournot competition (where the elasticity is associated with an individual firm's residual demand, the demand left after all rivals sell their output on the market). Manipulate Equation 15.2 in a different way to obtain an equivalent version of the inverse elasticity rule: pMCp=sieQ,p , where si=qi/Q is firm i's market share and eQp is the elasticity of market demand. Compare this version of the inverse elasticity rule with that for a monopolist from the previous chapter.Suppose the market for Hula Hoops is monopolized by a single firm. a. Draw the initial equilibrium for such a market. b. Now suppose the demand for Hula Hoops shifts outward slightly. Show that, in general (contrary to the competitive case), it will not be possible to predict the effect of this shift in demand on the market price of Hula Hoops. c. Consider three possible ways in which the price elasticity of demand might change as the demand curve shifts: It might increase, it might decrease, or it might stay the same. Consider also that marginal costs for the monopolist might be increasing, decreasing, or constant in the range where MR=MC Consequently, there are nine different combinations of types of demand shifts and marginal cost slope configurations. Analyze each of these to determine for which it is possible to make a definite prediction about the effect of the shift in demand on the price of Hula Hoops.Question 1a. With the aid of a diagram explain how a monopolist determines how muchoutput to produce and what price to charge. [4 marks]b. Explain how the perfectly competitive firm decides whether to operate or shutdown in the short run. [4 marks]c. Explain why firms operating in monopolistically competitive markets probablywill not earn an economic profit in the long run. [4 marks]d. Why does interdependence of firms play a major role in oligopoly but not inperfect competition or monopolistic competition? [4 marks]
- All question are with regards to the following set up. There are two firms A and B. Firmscompete in a Cournot Duopoly in Karhide. They set quantities qA and qB. Inverse demand isP(qA + qB) = 18 − qA − qB and costs are C(q) = 3 ∗ q for both firms. Firm B is a domestic firm(in Karhide,) and firm A is a foreign firm (from Orgoreyn.) The government of Karhide engagesin a strategic trade intervention by giving firm B a per unit subsidy of s. (That is, when firm Bproduces and sells qB units, firm B receives a payment of s ∗ qB from the government.)You must show your work at each step, unless the questions is followed by ”No work required.” We now consider the government’s choice of s ≥ 0. We can see from above thatprofits and outputs depend upon s. With that in mind, let πB(s) and qB(s) denote firm B’s profitand output as a function of the subsidy s. Let qA(s) denote firm A’s equilibrium output as afunction of s. Let G(s) = πB(s) − s ∗ qB(s) denote the government’s objective function (d)…Question 4 Consider a duopoly market with 2 firms. Aggregate demand in this market is given by Q = 500 – P, where P is the price on the market. Q is total market output, i.e., Q = QA + QB, where QA is the output by Firm A and QB is the output by Firm B. For both firms, marginal cost is given by MCi = 20, i=A,B. Assume the firms compete a la Cournot.Note that marginal revenue for both firms is given by MRA=500-2QA-QB, MRB=500-QA-2QB. Describe what a best-response curve is and how to find it. Derive the best-response function for each firm. What are the equilibrium quantities? What is the total quantity supplied on this market? What is the equilibrium price in this market?Perfect Picture Cameras: Perfect Picture Cameras is a national camera company. It competes with 2-3 national camera companies. In order to gain an upper hand in the market, Perfect Picture Cameras has differentiated its camera by including an automatic focus and flash. Perfect Picture Cameras has the ability to raise its prices because of its unique features. However, it sometimes worries about the decisions and strategies of the other competitors. Choose one type of market structure: Perfect competition oligopoly monopolistic competition monopoly Type of Market Structure: Reason:
- here are two firms in the market, Pepsi and Coke. Strategies: Low price (price promotion, LP), Medium price (regular price, RP), high price (new price strategy, HP). Payoffs: Coke, Pepsi’s Net Profits; LP, LP: $1.4m, $1.2m; LP, RP: $3.1m, $0.6m; LP, HP: $3.9m, -$1.3m. RP, LP: $1.3m, $1.8m; RP, RP: $2.0m, $1.8m; RP, HP: $4.3m, $-0.3m. HP, LP: -$1.2m, $3.6m; HP, RP: $0.8m, $3.9m; HP, HP: $2.8m, $2.5m. In this game, the NE is (are): (HP, HP) (LP, LP) and (HP, HP) (LP, LP) There is no NE in this game (RP, RP)Consider a duopoly market with 2 firms. Aggregate demand in this market is given by Q = 500 – P, where P is the price on the market. Q is total market output, i.e., Q = QA + QB, where QA is the output by Firm A and QB is the output by Firm B. For both firms, marginal cost is given by MCi = 20, i=A,B. Assume the firms compete a la Cournot. Find the inverse demand in this market. Note that marginal revenue for both firms is given by MRA=500-2QA-QB, MRB=500-QA-2QB. Describe what a best-response curve is and how to find it. Derive the best-response function for each firm. What are the equilibrium quantities? What is the total quantity supplied on this market? What is the equilibrium price in this market?Consider a duopoly market with 2 firms. Aggregate demand in this market is given by Q = 500 – P, where P is the price on the market. Q is total market output, i.e., Q = QA + QB, where QA is the output by Firm A and QB is the output by Firm B. For both firms, marginal cost is given by MCi = 20, i=A,B. Assume the firms compete a la Cournot. Find the inverse demand in this market. Note that marginal revenue for both firms is given by MRA=500-2QA-QB, MRB=500-QA-2QB. 2.Describe what a best-response curve is and how to find it. 3. Derive the best-response function for each firm. 4. What are the equilibrium quantities? 5. What is the total quantity supplied on this market? 6. What is the equilibrium price in this market?
- In the mobile phone market, Samsung and Apple constitute a duopoly in the production of devices.The American firm has the following demand q_a = 10 - p_a + 0.25p_s, and the Korean firm, q_s = 20 -p_s+ 0.5p_a. Because both firms assembly their devices in China, their cost structure is the same andequal to ?(q) = 10q, answer the following questions.a) What would be the equilibrium (quantity, price, and profit) in this market, and interpret youranswer.b) If they decide to form a cartel, what are the new quantities, prices, and profits?1. Based on the best available econometric forecasts, market elasticity demand for your company's products is -2.5. Marginal cost to produce product is constant at $ 140. Determine the optimal price per unit, if: a.You are a monopolist. b.You compete with one another in the Cournot oligopoly. c.You are competing with 9 other companies in the Cournot oligopoly. 2. The water pump company has succeeded in introducing a water pump that saves electricity, is easy to install, and is durable (guaranteed). Its high quality has given the company an early edge in the local and national markets, but the entry of highly skilled competitors may occur within the next 3 years. Assume that the income and expense relationship of the company is as follows: TR = 22000Q - 15.6Q2 MR = dTR / dQ = 22000 - 31.2Q TC = 300000 + 4640Q + 10Q2 MC = dTC / dQ = 4640 + 20Q Where TR is income (in thousands of rupiah), Q is quantity (in units), MR is marginal income (in thousands of rupiah), TC is total cost,…Consider a duopoly market with 2 firms. Aggregate demand in this market is given by Q = 500 – P, where P is the price on the market. Q is total market output, i.e., Q = QA + QB, where QA is the output by Firm A and QB is the output by Firm B. For both firms, marginal cost is given by MCi = 20, i=A,B. Assume the firms compete a la Cournot. a) Find the inverse demand in this market. Note that marginal revenue for both firms is given by MRA=500-2QA-QB, MRB=500-QA-2QB. b) Describe what a best-response curve is and how to find it. c) Derive the best-response function for each firm. d) What are the equilibrium quantities? e) What is the total quantity supplied on this market? f) What is the equilibrium price in this market? **if possible, please answer my questions in typing as its hard for me to read works in hand-written, thanks