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Explain the Bertrand paradox. How does it inform our explanations of market power in industries with a small number of firms?
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- Identify whether each statement is true or false. Market power is the ability of a firm to charge a price greater than marginal cost Most markets are perfectively competitive Charging a price greater than marginal cost leads to maximum economic efficiency In reality, few markets are perfectively competitiveSuppose that a firm with market power could charge a different price to every customer based on how much he or she were willing to pay. How would this affect the profits of this firm?The smartphone market has been dominated by Apple, but recently the Droid has been able to leverage Google's information services into market gains, while Blackberry, known for its secure business-oriented network, has attempted to become more attractive with a “friendlier” interface. At the same time, a number of less capable fringe firms are emerging. Suppose an economist analyzes this industry as follows: ECONOMIST: The market had been a near Apple monopoly. Profits of this monopoly attracted entry by Droid- and Blackberry-based phones, increasing rivalry between firms in the industry. The emergence of smaller fringe firms suggests that entry barriers have fallen substantially, so competition has or will soon become fiercer. True or False: This analysis is consistent with the industrial organization (IO) view.
- Why have European steel firms not been split with the inherent costs of having significant market power?Please note: Parts a, b, and c are already answered. Please answer part d which has two subparts. You are the manager of a monopoly with costs, demand, and marginal revenue as in the graph at the top of Figure 1 attached. d. Suppose economic conditions change in such a way that the demand curve for your company shifts left.i. Draw a demand curve on the bottom graph on Figure 1 that leads to zero economic profits.ii. Draw a demand curve on the bottom graph on Figure 1 such that any further leftward demand shift will cause you to shutdown.Asap Plz Suppose that a firm with market power can perfectly price-discriminate and faces the demand function q = 400- 4P. The firm's marginal costs are given by MC(q) = 2q +0.12q 2. If the firm cannot price-discriminate, the profit-maximizing level of output is 20.27, and the optimal price is $94.9325 Identify consumer surplus and producer surplus in the market when the firm cannot price discriminate, assuming that the firm maximizes profits. Calculate the deadweight loss from market power. Round your answers to two decimal places.consumer surplus: $______producer surplus: $________dead weight loss: $_____
- Do you think a monoplist firm and a competitive firm have the same market power?Explain your answer theoretically and graphically also show that market power is zero when elasticity is equal to unityFind an example of consumer product market that fits John Sutton’s theory of the domination of brand-named firms and discuss why this is the case. Would his theory fit other types of industries? Why or why not?PROBLEM (5) (In a market with demand Q = 780 - p, there are 3 identical firms, A, B and C; each with a total cost function TC(Q) = 3(Q)^2. Calculate the market price under each of the 2 scenarios below, (i) B and C jointly form the fringe supply and A is the dominant firm in the dominant firm model. ( ii) They act as perfectly competitive firms -as if trying to maximize total surplus and minimize DWL- that is, their joint MC serves as the “market supply” for the competitive market. Please answer all the parts!
- These are statements comparing monopoly with perfect competition. Which of the following statements is/are false? Select all that apply. A. A a perfectly competitive industry faces a horizontal straight line demand curve whereas a monopoly faces a downward sloping demand curve. B. A perfectly competitive firm faces a small fraction of the industry demand curve whereas a monopoly faces the entire market demand curve. C. A perfectly competitive firm can only set quantities; a monopoly can set both price and quantity, although once it chooses a price (quantity), the other variable, quantity (price), is determined by the demand curve it faces. D. A perfectly competitive equilibrium is efficient; a monopoly equilibrium is inefficient. E. A perfectly competitive firm necessarily earns zero economic profit in a long run equilibrium; a monopoly typically earns a super-normal profit in a long run equilibrium.You are the manager for a monopoly with costs, demand, and marginal revenue as in graph 1. Suppose economic conditions change in such a way that the demand curve for your company shifts left.i. Draw a demand curve on graph 2 that leads to zero economic profits.ii. Draw a demand curve graph 2 such that any further leftward demand shift will cause you to shutdown.You are the manager of a monopoly, and your analysts have estimated your demand and cost functions as P = 200 − 2Q and C(Q) = 1,000 + 3Q2, respectively. a. What price–quantity combination maximizes your firm’s profits? Instructions: Round your response to the nearest penny (two decimal places). Price: $ Quantity: units b. Calculate the maximum profits. Instructions: Round your response to the nearest penny (two decimal places). $ c. Is demand elastic, inelastic, or unit elastic at the profit-maximizing price–quantity combination? multiple choice 1 Elastic Unit elastic Inelastic d. What price–quantity combination maximizes revenue? Instructions: Round your response to the nearest penny (two decimal places). Price: $ Quantity: units e. Calculate the maximum revenues. Instructions: Round your response to the nearest penny (two decimal places). $ f. Is demand elastic, inelastic, or unit elastic at the revenue-maximizing price–quantity…