MyLab Economics with Pearson eText -- Access Card -- for Foundations of Economics
8th Edition
ISBN: 9780134518312
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 18, Problem 6SPPA
To determine
To explain:
The type of war between Company C and Company P and their strategies that they use in a game.
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Students have asked these similar questions
This is a Microeconomics problem. I need help for part (d).
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.
Match 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…
For each statement in the left column find and match convenient part from the right column of the table:
Write your answer
A. The market, represented by a group of sellers, unified by an agreement on its segmentation and final price of the production, is considered as ...
1. ... for the
oligopoly
B. The situation in which society undergoes losses due to high prices and low output is more typical for ...
2 ... for the price discrimination
C. The market in which several sellers can affect and control the price of products in an industry is typical for ...
3. ... for the price competition
D. The situation when a different price is given for the same product is typical for ...
4. ... for the market of imperfect competition
E. Limited resources is the main factor determining the situation typical for ...
5. ... for the perfect competition
F. The absence of the supply curve is typical for...
6. ... for the cartel…
Chapter 18 Solutions
MyLab Economics with Pearson eText -- Access Card -- for Foundations of Economics
Ch. 18 - Prob. 1SPPACh. 18 - Prob. 2SPPACh. 18 - Prob. 3SPPACh. 18 - Prob. 4SPPACh. 18 - Prob. 5SPPACh. 18 - Prob. 6SPPACh. 18 - Prob. 7SPPACh. 18 - Prob. 8SPPACh. 18 - Prob. 1IAPACh. 18 - Prob. 2IAPA
Ch. 18 - Prob. 3IAPACh. 18 - Prob. 4IAPACh. 18 - Use this information to work Problems 5 to 7. DOJ...Ch. 18 - Use this information to work Problems 5 to 7. DOJ...Ch. 18 - Prob. 7IAPACh. 18 - Which of the following statements is incorrect. In...Ch. 18 - If firms in oligopoly form a cartel, it will...Ch. 18 - Prob. 3MCQCh. 18 - Prob. 4MCQCh. 18 - Prob. 5MCQCh. 18 - Prob. 6MCQCh. 18 - Prob. 7MCQ
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- (a) There are two companies in the world that produce large passenger aircraft, Boeing, and Airbus. How would you characterize the market for large passenger aircraft, monopoly, perfectly competitive, monopolistically competitive or Oligopoly? Please explain. Large passenger aircraft are defined as aircraft than can carry more than 150 passengers. (b) The market for telephone services has become more competitive over time with the advancement of technology in the industry. Technology in the aircraft manufacturing industry has also advanced significantly. Why hasn’t this improvement in technology led to an increase in competition (Boeing and Airbus have been the only manufacturers in this industry for many years)? Please explain.arrow_forward1. 90%>CR4>60%. a. effective monopoly b. effective competitive c. tight oligopoly d. loose oligopoly 2. An oligopolistic firm having lower costs than the other firms sets a lower price which the other firms have to follow. a. barometric price leadership b. stackelberg oligopoly c. price leadership by a low-cot firm d. price leadership by dominant firm 3. It means that one firm possesses a dominant market share and acts as a leader by setting price for the industry. a. barometric price leadership b. dominant firm c. price leadership d. none of the abovearrow_forwardWith 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. How is…arrow_forward
- Companies like Amazon and Facebook and Google are so dominant that they really have very little competition. Even when new companies like Zappos and Diapers.com threatened it, Amazon bought up both companies. Facebook did that with WhatsApp and Instagram. Is that healthy competition or monopoly/oligopoly power? Discuss.arrow_forward1. compare the quantity and price of an oligopoly to those of a monopoly 2. compare the quantity and price of an oligopoly to competitive marketarrow_forwardQuestion 20 In the market for a brand name medicine with a single company selling the medicine, that company is a_______Eventually, the government lets other companies sell the medicine as a "generic" alternative to the brand name. The effect of this increased competition is to_______ the medicine's price.O. monopoly, decreaseO. oligopoly, decreaseO. monopoly, increaseO. oligopoly, increasearrow_forward
- 1. In oligopoly a.) firms compete with each other only by raising and lowering quantity because prices are fixed b. )the fewness of firms creates mutual interdependence in pricing among the firmsarrow_forwardThe task to complete is to create a market scenario for a branded handbag. (You can google handbags and come up with hundreds!): Name the company and describe one of its "signature" handbags. - Draw the monopolistic competition market model for that company showing a profit. 1. Do you think that the United State's economic system is best described by a perfectly competitive dynamic or best described by a monopoly dynamic where there are forces that exclude entry into markets or by a monopolistic competition dynamic with some power to exclude entry but mainly a market of differentiation?arrow_forward1. There are 10 firms in an industry, and each firm has a market share of 10 percent. The industry’s Herfindahl index is a. 10. b. 100. c. 1,000. d. 10,000. 2. In the small town of Geneva, there are five firms that make watches. The firms’ respective output levels are 30 watches per year, 20 watches per year, 20 watches per year, 20 watches per year, and 10 watches per year. The four-firm concentration ratio for the town’s watch-making industry is: a. 5. c. 90. b. 70. d. 100. 3. Which of the following best describes the efficiency of monopolistically competitive firms? a. Allocatively efficient but productively inefficient. b. Allocatively inefficient but productively efficient. c. Both allocatively efficient and productively efficient. d. Neither allocatively efficient nor productively efficient.arrow_forward
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