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Dear tutor, please solve these True/False Questions. Thank You!
-
Two-part tariffs allow the
monopoly firm to capture all of the potentialconsumer surplus generated by the sale of its product. -
In a simultaneous game where both players prefer doing the opposite of what the opponent does, a Nash equilibrium does not exist.
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- Three firms are bidding for the rights to provide cable television services. The demand for cable television is given by the equation P=100-Q. Firm 1 has an average cost of AC1 = 10, Firm 2 has an average cost of AC2 = 20, and Firm 3 has an average cost of AC3 = 30. If the rights are awarded using an English auction, approximately what is the resulting price and quantity of services provided? (A). P= 10; Q = 90. (B). P = 20; Q = 80. (C). P = 30; Q = 70. (D). P = 20; Q = 90. (E). P = 10; Q = 80.This is a Microeconomics problem. Two firms A and B operating in the same market must choose between a collude price and a cheat price. Answer the following questions in order. (a) Does Firm A have a dominant strategy? Explain your answer. (b) Does Firm B have a dominant strategy? Explain your answer. (c) Is there an equilibrium solution to the above game? (d) Is this equilibrium solution to the game the most "ideal" outcome for the players? Explain clearly why or why not.In the Nash equilibrium of a Cournot game with two firms who have identical marginal costs, each firm chooses to produce half of the quantity that would be produced by a monopolist, given the same aggregate demand and marginal cost.(a) True. (b) False.
- Two firms are engaged in duopoly competition in a market with demand Q = 120 - p and zero costs. The reaction function for firm i given firm j's output q i = 60 - 1 2 q j . What is the payoff to firm i if the two firms engaged in collusion to maintain monopoly output and prices. Assume that each firm gets half the monopoly profit.American Airlines and Braniff Airways are the two airlines operating flights from your region. Suppose that each company can charge either a high price for tickets or a low price. First, American Airlines will choose the price level. Following this, Braniff Airways will observe its competitor’s decision and choose the price level for its tickets. If both of the companies choose High, they earn $25,000 each. If they both choose Low, they earn $18,000 each. If the companies choose different levels of prices, the one choosing the high price will earn $15,000 and the one choosing Low will earn $30,000. a) Draw the game three. b) Solve the game by using backwards induction. c) If Braniff Airlines makes a promise to choose High if American Airlines chooses High, should American Airlines trust this promise? Explain.Suppose two brothers own identical skydiving companies but have decided to experiment with different pricing structures. The older brother’s company, Air Adventures, charges everyone the same price, while the younger brother’s company, Sky Warriors, sets its prices using a twotiered, price-discrimination model. Assuming that both companies face the same market demand curves, marginal costs, and costs of production, and wield significant market power for their service area, which of the following is most likely to occur? a. Air Adventures will generate a similar net revenue to Sky Warriors. b. Sky Warriors will generate a higher net revenue than Air Adventures. c. Sky Warriors will generate a lower net revenue than Air Adventures. d. Air Adventures will generate a higher net revenue than Sky Warriors. e. Sky Warriors will eventually switch to the Air Adventures model.
- Which of the following, if true, would allow oligopolists to enjoy greater profits through collusion?" The collusion contract is non-binding. The game is being played only once. The players are not allowed to interact among themselves. The collusion contract is enforced by an external authority.Two firms, Firm 1 and Firm 2, compete by simultaneously choosing prices. Both firms sell an identical product for which each of 100 consumers has a maximum willingness to pay of $40. Each consumer will buy at most 1 unit, and will buy it from whichever firm charges the lowest price. If both firms set the same price, they share the market equally. Costs are given by c; (q) = 16q;. Because of government regulation, firms can only choose prices which are integer numbers, and they cannot price above $40. Answer the following: a) If Firm 1 chooses pi = 32, Firm 2's best response is to set what price? b) If Firm 2 chooses the price determined in the previous question, Firm 1's best response is to choose what price? c) If Firm 1 chooses pi = 9, Firm 2's best response is a range of prices. What is the lowest price in this range? d) Now suppose both firms are capacity-constrained: Firm 1 can produce at most 42 units, and Firm 2 can produce at most 44 units. If firms set different prices,…The U.K. Office of Fair Trading has recently unveiled a plan that will offer immunity from prosecution to firms who blow the whistle on their co-cartel conspirators. In the United States, this tactic has proven extremely successful: Since its introduction in 1993, the total amount of fines for anticompetitive behavior has increased twentyfold. Show how the tactic initiated by the U.S. Department of Justice, soon to be followed by the U.K. Office of Fair Trading, changes the rules of the game played between firms in a secret cartel.
- Consider a "Betrand price competition model" between two profit maximizing widget producers say A and B. The marginal cost of producing a widget is 4 for each producer. Each widget producer has a capacity constraint to produce only 5 widgets. There are 8 identical individuals who demand 1 widget only, and individuals value each widget at 6. If the firms are maximizing profits, then which of the following statement is true: a) Firm A and Firm B will charge 4 b) Firm A and Firm B will charge 6 c) Firm A and Firm B will charge greater than or equal to 5 d) None of the options are correct. Explain clearly.Consider a buyer who, in the upcoming month, will make a decision about whether to purchase a good from a monopoly seller. The seller “advertises” that it offers a high-quality product (and the price that it has set is based on that claim). However, by substituting low-quality components for higher-quality ones, the seller can reduce the quality of the product it sells to the buyer, and in so doing, the seller can lower the variable and fixed costs of making the product. The product quality is not observable to the buyer at the time of purchase, and so the buyer cannot tell, at that point, whether he is getting a high-quality or a low-quality good. Only after he begins to use the product does the buyer learn the quality of the good he has purchased. The payoffs that accrue to the buyer and seller from this encounter are as follows: The buyer’s payoff (consumer surplus) is listed first; the seller’s payoff (profit) is listed second. Answer each of the…Compare and contrast Price and Quantity determination in a strategic situation like an oligopoly and that in a purely competitive situation. Give examples for each type of scenarios.
