Economics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280595
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Chapter 12, Problem 8DQ
To determine
The classification of contestable market.
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Chapter 12 Solutions
Economics: Principles and Policy (MindTap Course List)
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- ii)Do you think oligopoly markets operate efficiently?arrow_forwardIdentify the conditions for a contestable market, and explain the ramifications for market power and the sustainability of long-run profits.arrow_forwardWhen an industry is supplied by an oligopoly, what is the impact of the introduction of trade barriers?arrow_forward
- Explain how strategic alliances are a substitute for exploiting economies of scope in diversification.arrow_forwardWhich is the best example of an oligopoly?arrow_forward. Identify a local competitor in your country and discuss their advantages and limitations with respect to their product offerings.arrow_forward
- The following diagrams illustrate an industry under oligopoly consisting of 10 equal-sized firms, and a particular firm in that industry. Each of the firms produces an identical product. (a) Assuming the firms form a cartel, what price will the cartel choose if it wishes to maximise overall profits for the cartel? (b) What total output must the cartel produce in order to maintain this price? (c) To what output will an individual firm be restricted if this price is to be maintained? Assume that all firms are permitted to produce the same level of output. (d) If the other firms stick to this output, how much would an individual firm be tempted to produce if it wished to maximise its own profit at the agreed price? (e) If it undercut the cartel price, what price and output would maximise its profit (assuming the other members did not retaliate)?arrow_forwardMatch the terms on the left with the definitions in the column on the right (use alphabet to match for example 1-a/2-b/3-c). 1. relevant market a. price changes by one firm in oligopoly affect pricing by other firms 2. market structure b. a few firms that produce goods that are close substitutes 3. mutual interdependence c. one firm producing a good with no close substitutes 4. industry d. the percentage of total market sales produced by a particular firm 5. patent e. a set of goods with high cross elasticities among them 6. monopolistic competition f. large number of firms producing goods that are perfect substitutes 7. oligopoly g. a set of market characteristics common to a group of firms 8. product differentiation h. physical or perceived differences among substitute goods in a market 9. brand loyalty i. many firms that produce differentiated goods that are close substitutes 10. perfect competition k. a monopoly right on…arrow_forwardThe Oligopoly Market Structure - Country Brazil Using the country Brazil, provide two examples that the above-market structure impact consumers and two examples of its impact on producers.arrow_forward
- Why Cooperation in the oligopoly (cartel) market cannot last long, what are the causes?arrow_forwardExplain whether or not each industry fits the definition of an oligopoly. What are the dominant firms ineach industry?(a) Video game consoles(b) Video streaming services(c) Internet search engines(d) Beer(e) Cornarrow_forwardQUESTION 3 Smalltown has 140 residents and two mobile phone providers: Verizon and AT&T Each firm's costs: FC = $0, MC = $10. Assume the two firms collude, how much profit does each make if they share it equally? P Q TR TC Profit 45 50 40 60 35 70 30 80 25 90 20 100 15 110 10 120 5 130 0 140 O Q = 30, P = $40, profits = $900 Q = 40, P = $30, profits = $800 Q = 60, P = $10, profits = $0 Q =25, P = $45, profits = $875arrow_forward
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