weighing out their pros and cons and considering the other firm's reaction to take an important decision on pricing next week. Each firm is faced with two option: to charge a high price or to charge a lower price. If both firms charge a higher price, they make profits of $2500 each, while if both firms choose to charge a lower price, they make $4000 in profits. If one

weighing out their pros and cons and considering the other firm's reaction to take an important decision on pricing next week. Each firm is faced with two option: to charge a high price or to charge a lower price. If both firms charge a higher price, they make profits of $2500 each, while if both firms choose to charge a lower price, they make $4000 in profits. If one

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter9: Monopolistic Competition And Oligoply

Section: Chapter Questions

Problem 18SQ

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Q9. A fundamental feature of a monopolistic market is that the firm ________. * a) can sell any quantity it desires at the current market price b) can obtain any price for any quantity of output c) faces a perfectly inelastic demand curve d) faces the price and quantity trade-off dictated by market demand Q2. Which of the followings is an appropriate statement about the "limit pricing" strategy"? * a) The strategy is most effective in a perfectly competitive market. b) Goods and services are sold by suppliers at a price higher than the short-term profit maximizing level. c) The main purpose of the strategy is to protect the existing firm's long-run profits from damage by competition. d) The main purpose of the strategy is to charge each customer the maximum price he or she is prepared to pay for the product. Q3. Which of the followings is an example of second degree price discrimination? * a) Ladies' night in a bar b) Half-price tickets for kids in the cinema…
Baranby Inc produces in a monopolistically competitive market. Which of the following correctly explains how a firm in this market structure would transition from the short run to the long run? (a) The supernormal profits earned by Barnaby Inc. in the short run will attract new firms into the market. This will shift Barnaby Inc.’s demand curve to the left and it will continue to shift left until Average Revenue equals Average Cost and only normal profits are made. (b) The supernormal profits earned by Barnaby Inc. in the short run will attract new firms into the market. This will shift the market supply curve to the right, which will reduce the market price and the price faced by Warwick Inc. The price will keep falling until Average Revenue equals Average Cost and only normal profits are made. (c) The supernormal profits earned by Barnaby Inc. in the short run will remain in the long run, due to high barriers to entry which prevent the entry of new firms and thus protect Barnaby…
Firms like Papa John’s, Domino’s, and Pizza Hut sell pizza and other products that aredifferentiated in nature. While numerous pizza chains exist in most locations, thedifferentiated nature of these firms’ products permits them to charge prices abovemarginal cost. Given these observations, is the pizza industry most likely a monopoly,perfectly competitive, monopolistically competitive, or an oligopoly industry? Use thecausal view of structure, conduct, and performance to explain the role of differentiationin the market for pizza. Then apply the feedback critique to the role of differentiation inthe industry.
Which of the following is true of a monopolistically competitive firm in long-run equilibrium? Group of answer choices a. It produces where price equals marginal cost, and it earns zero economic profits. b. It produces where marginal cost equals marginal revenue, and the price is equal to average total cost. c. It produces at the minimum average total cost, and it utilizes all excess capacity. d. It produces where marginal revenue exceeds marginal cost, and it earns positive economic profits. e. It produces more than the allocatively efficient quantity, and the price is greater than marginal cost.
Determine whether the statements is true, false, or uncertain. If the statement is false or uncertain, please correct the statement to make it true. If the statement is true, please explain your answer briefly. Include a short definition of any CAPITALIZED term. 1. In a long-run equilibrium, both perfectly competitive markets and MONOPOLISTIC COMPETITIVE MARKETS have price equal to average total cost. (Define monopolistic competition)
Provide an example of an industry that is monopolistically competitive. Regarding average total cost at the profit maximizing output, what is the difference between perfect competition and monopolistic competition ?
What does the income elasticity of demand measure? a ) The responsiveness of quantity demanded to changes in price b ) The responsiveness of quantity demanded to changes in income c ) The responsiveness of supply to changes in price d ) The responsiveness of supply to changes in income Which of the following is a characteristic of a monopolistic competition market structure? a ) Many buyers and many sellers with identical products Give me correct answer with full explanation and calculation otherwise i give downvote Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.
Suppose that a typical firm in a monopolistically competitive industry faces a demand curve given by: q = 60 − (1/2)p, where q is quantity sold per week. The firm’s marginal cost curve is given by: MC = 60. 1. How much will the firm produce in the short run? 2. What price will it charge? 3. Draw the firm’s demand, marginal revenue, and marginal cost curves. Does this solution represent a long-run equilibrium? Why or why not? Sometimes oligopolies in the same industry are very different in size. Suppose we have a duopoly where one firm (Firm A) is large and the other firm (Firm B) is small, as shown in the prisoner’s dilemma box in Table 5.Firm B colludes with Firm AFirm B cheats by selling more outputFirm A colludes with Firm BA gets $1,000, B gets $100A gets $800, B gets $200Firm A cheats by selling more outputA gets $1,050, B gets $50A gets $500, B gets $20Assuming that the payoffs are known to both firms, what is the likely outcome in this case?
The market for peanut butter in Nutville is monopolistically competitive and in long-run equilibrium. One day, consumer advocate Jif Skippy discovers that all brands of peanut butter in Nutville are identical. Thereafter, the market becomes perfectly competitive and again reaches its long-run equilibrium. Using an appropriate diagram, explain whether each of the following variables increases, decreases, or stays the same for a typical firm in the market. Price Quantity Average total cost Marginal cost Profit please answer all 5 parts
Suppose you are employed at a monopolistic company as a research (pricing)economist and you are deriving the behavior of two markets based on demand curves given by: D1 (p1) = 50 - p1 D2 (p2) = 50 - 2p2 Assume that the marginal cost is constant at $8 a unit. (a) If it can price discriminate, what price should it charge in each market in order to maximize profits? (b) If it can't price discriminate, what price should it charge?
In the late 1990s, Vanguard Airlines operated as a low-cost carrier, offering low prices and limited services, out of Kansas City, Missouri. Not long after its inception, Vanguard began offering a significant number of flights based out of Midway International Airport in Chicago, Illinois, as well. When Vanguard expanded to Midway, incumbent airlines, such as Delta, quickly responded to its low fares by offering many competing flights at comparably low prices. The intense price competition ultimately caused Vanguard to exit Midway in 2000 and file for bankruptcy in 2002. At varying points in time, the airline industry has been described as a contestable market; does the example of Vanguard support or refute this characterization of the airline industry? Explain
An important difference between the situation faced by a profit-maximizing monopolistically competitive firm in the short run and the situation faced by that same firm in the long run is that in the short run, a. there are many firms in the market, but in the long run, there are only a few firms in the market. b. price may exceed marginal cost, but in the long run, price equals marginal cost. c. price may exceed marginal revenue, but in the long run, price equals marginal revenue. d. price may exceed average total cost, but in the long run, price equals average total cost.