Chapter 9, Problem 1QFR

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…

Fill in the table and use your answers to the questions to figure out which market type each business fits into. Below you are given potential answers to questions 3 through 9 on each table and one example table.  Please fill in the whole table. 1. Business  Verizon 2. Industry   3. Size of Market   4. Number of Buyers   5. Number of Sellers   6. Product Type   7. Barriers to Entry   8. If high, why?   9. Market Type

true or false In the case of natural monopolies, economists argue that production is more efficient  with several smaller firms rather than one large firm.

Why might a government try to prevent monopolies or oligopolies from forming in a market? And how would they prevent this?

Question 3 Which of the following is NOT an example of a barrier to entry? Group of answer choices A musician obtains a copyright for her original song. An entrepreneur opens a popular new restaurant. A pharmaceutical company obtains a patent for a specific high blood pressure medication. Mighty Mitch’s Mining Company owns a unique plot of land in Tanzania, under which lies the only large deposit of Tanzanite in the world.

How can incumbents legally erect entry barriers around novel and non-obvious products or production processes? Question 10Select one: a. Collusive pricing b. Predatory pricing c. Patents d. Formation of a cartel e. Price fixing

How does a lack of competition affect prices and output?  Describe what the role of government is in markets vis-a-vis firms in the market.

Briefly compare big-firm and entrepreneurial capitalism. In this criteria Criterion 1: Role of big firms

Two firms, A and B, are each considering trying to develop a newwidget. Whichever firm is first to develop the new widget wins a patent worth $20 million plus a penny.Developing a new widget involves several ‘steps’. The firms alternate moves, with A moving first, until oneof them wins the patent. All moves are observed. In each turn, a firm can choose whether to take 0, 1, or2 development ‘steps’. Taking 0 steps in a turn costs that firm $0. Taking 1 step in a turn costs $4 million.And taking 2 steps in a turn costs $11 million. For simplicity, assume a zero discount rate. Initially, eachfirm is 4 steps away from completing development.(a) Describe and explain carefully what will happen in this patent race and why. [Hint: it may help toread Dutta ch 12 (but notice I changed the numbers).](b) Very briefly explain what is the economic rationale for granting ‘intellectual property rights’ such aspatents. What are some disadvantages for society of granting such rights?