Please answer the following questions (1,2&3) 1.) What are the implications of price leadership for the oligopoly market? 2.) Explain why firms might want to collude? 3.) Oligopolists often possess too much monopoly power. Evaluate whether governments should intervene in oligopolist markets.
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Topic: Oligopoly
Please answer the following questions (1,2&3)
1.) What are the implications of price leadership for the oligopoly market?
2.) Explain why firms might want to collude?
3.) Oligopolists often possess too much
Step by step
Solved in 4 steps
- Exercise 3: merger example Algoma Steel Inc. and Stelco Steel Inc. Merger? Suppose you work at the Bureau and your task is to assess a proposed merger between Algoma Steel Inc. and Stelco Steel Inc. For simplicity, these are the only two firms in Canada. The cost of this merger is that the two firms will become one joint firm, or the duopolists become the monopolist. This is likely to limit consumer choices and the equilibrium price is likely to rise. However, this merger is likely to increase economies of scale, or production cost will fall. From existing studies you know the following information, and P is the price per ton of steel and Q is the number of tons of steel. Demand for steel: P = 1,800 - Q Marginal revenue: MR = 1,800 - 2Q Supply of steel: MC = ATC = 600, identical across the two firms. Case #1: Before Merger - Cournot duopoly - the government does not intervene The total surplus (TS), defined as the sum of consumer surplus and producer surplus, is equal to…Question 36 Oligopoly differs from monopolistic competition in that Group of answer choices oligopolies have few buyers, while monopolistically competitive markets have many buyers. oligopolies face downward-sloping demand curves, while monopolistic competitors face horizontal demand curves. mutual interdependence is essential in monopolistic competition. each monopolistically competitive seller produces a slightly differentiated product.Subject: Microeconomics Question:What market structure has a TR that is equal to the 45 degree line? -pure -monopoly -monopolistic -oligopoly
- Principles of EconomicsTitle: Market Structure Analysis Objective: The objective of this assignment is to analyze and compare the market structures of a company that fits the definition of a monopoly, a monopolistic competition, and an oligopoly. Students will gain insights into the business strategies, market behavior, and implications for consumers and competition in different market structures. Instructions: 1) Company Selection - Each group should choose one company that clearly fits the definition of either a monopoly, monopolistic competition, or oligopoly. The selected companies can be local or international. 2) Market Structure Identification - Identify and describe the market structure in which each selected company operates. Provide evidence and reasons for classifying the company under the chosen market structure. 3) Characteristics Analysis - For each company, analyze and discuss the characteristics associated with its respective market structure. Consider factors…1. Characteristics of oligopoly An oligopolistic market structure is distinguished by several characteristics, one of which is difficult entry. Which of the following are other characteristics of this market structure? Check all that apply. Market control by many small firms Market control by a few large firms Neither mutual interdependence nor mutual dependence Either similar or identical products Mutual interdependenceWhat is the big advantage of oligopoly? Question 10 options: Oligopolies are more predictable than monopolistic competition or a monopoly. As an economy of scale oligopoly may produce more goods with a lower cost of production. Oligopolies will always promote technological progress. Trade wars between oligopolies stimulate healthy competition
- Question1 Next time you are shopping at the supermarket (or imagine you are there), what is a good example of a good (not a brand name) that is sold in an oligopoly market? What is the good? What are the major manufacturers (be sure to turn the package over so you are now confusing brand names with the manufacturer)? Which characteristics of an oligopoly market are shown here (few dominant producers; identical prices; high barriers to entry)?COURSE: MICROECONOMICS LEVEL 2 COURSE: MICROECONOMICS LEVEL 2 Consider a company A operating in an oligopoly which has a market share of 20% and a unit cost of $50. It currently sells at a price (P) of $52.9 with a price elasticity of demand of -3.5. This company will merge with company D, so that market share will reach 50%. Estimate impact of this operation on selling price under 2 scenarios:(a) With economies of scale, given the merger. Cost reduction of 15%.b) Without economies of scale, constant cost of 50%.c) How much does market power of merged company change, considering with and without economies of scale?1. Characteristics of oligopoly An oligopolistic market structure is distinguished by several characteristics, one of which is either similar or identical products. Which of the following are other characteristics of this market structure? Check all that apply. Market control by many small firms Market control by a few large firms Mutual dependence Mutual interdependence Difficult entry
- Question 1a. With the aid of a diagram explain how a monopolist determines how much output to produce and what price to charge. b. Explain how the perfectly competitive firm decides whether to operate or shut down in the short run. c. Explain why firms operating in monopolistically competitive markets probably will not earn an economic profit in the long run. d. Why does interdependence of firms play a major role in oligopoly but not in perfect competition or monopolistic competition? Question 2a. A producer borrows money and starts a business. He himself looks after the business. Identify implicit and explicit costs from this information. Explain. b. List and explain which of the following is a fixed cost or a variable cost for Caribbean Airlines. i. The cost of fuel used in its planes. ii. The rent on its Piarco headquarters. iii. The lease payments on its current inventory of jets. iv. The cost of peanuts it serves to passengers. v. The salary paid to the Chief Executive Officer. c.…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]Question 1 Assume the market for a product can be described as a Cournot duopoly with two identical firms. The Nash-equilibrium in this market is that the two firms produce the same quantity. Hence, they will have identical market shares, each will have 50%. Assume that firm 1 decides to invest in a technology that reduces its marginal costs. a) What will happen to the two firms market shares? You must explain how you find the answer. b) What will happen to total production and the price of the product? Again, explain your answer.
