Homework 9

(Table: Demand Schedule of Whatchamacallits) Use Table: Demand Schedule of Whatchamacallits. The market for whatchamacallits consists of two producers, Emma and Joshua. Each firm can produce whatchamacallits with no marginal cost or fixed cost. Suppose that these two producers have formed a cartel, agreed to split production of output evenly, and are maximizing total industry profits. If Emma decides to cheat on the agreement and sell 100 more whatchamacallits, Emma's profit will be and Joshua's profit will be Table: Demand Schedule for Whatchamacallits Price of a Quantity of Whatchamacallit Whatchamacallits $10 9 8 7 6 5 4 3 2 1 0 a) $1,250; $1.250 b) $1,000; $1,400 c) $500; $500 d) $1,400; $1,000 Demanded 0 100 200 300 400 500 600 700 800 900 1,000

(Monopolistic Competition Market) 3D. What is the overall impact of the monopolistic competition market structure on the competition?

6. (Price Leadership) Why might a price-leadership model of oligopoly not be an effective means of collusion in an oligopoly?

5) (10) Suppose that a monopolist faces a linear demand curve. Explain why the monopolist will never produce in the inelastic region of the demand curve. Does that mean that the monopolist should produce at the unit elastic point on the demand curve? When will the monopolist produce at the unit elastic point on the demand curve? Rich Text Area. Press ALT-0 for help.

10. (Perfect Price Discrimination) Why is the perfectly dis- criminating monopolist’s marginal revenue curve identical to the demand curve it faces?

3. (a) Narrowland, Broadland and Wideland are the only three laptop producing countries in the world. The three countries have the same production technology for every firm, and face the same demand conditions. The annual sales of Narrowland, Broadland and Wideland are 100000, 900000, and 400000 laptops respectively. Fixed cost and marginal cost of production of laptops for each firm in each country are 10000 and 1000 respectively; and the degree of responsiveness of each firm's sales to its price, vis-à-vis other firms is 1/10. (i) Calculate the equilibrium number of firms in the three countries before trade. (ii) What is the equilibrium price in these countries under autarky? (iii) Calculate the total number of firms after the economies are opened up to trade and the equilibrium price. (iv) How will your answer to the above parts change if the marginal cost of production of laptop for every firm increases to 2000? (b) A country produces two goods: Cars (using labour and machines) and…

11. (Oligopoly Behavior) Why is firm behavior under oligopoly so difficult to predict?

(Barriers to Entry) Explain how economies of scale can be a barrier to entry.

(Short-Run Profit Maximization) Answer the following questions on the basis of the monopolist's situation illustrated in the following graph. a. At what output rate and price does the monopolist operate? b. In equilibrium, approximately what is the firm's total cost and total revenue? c. What is the firm's economic profit or loss in equilibrium?

31. Type of product: In a small town, there are four providers of broadband Internet access: a cable company (e.g., Xfinity), the phone company (e.g., AT&T), and two satellite companies. The Internet access offered by all four providers is of the same speed. Almost everyone in the city already has broadband, so any potential new company would be unable to compete with the existing providers. * (1 Point) Unique Differentiated Standardized (Identical) providers of broadband Internet access: a cable . AT&T), and two satellite companies. The 32. Unique

3.(Characteristics of Monopolistic Competition) Why is a firm in monopolistic competition said to be competitive? In what sense is that firm monopolistic?

(KEY QUESTION) In the movie Rebel Without a Cause, James Dean and Buzz Gunderson compete for thefavours of sixteen year old Judy. Buzz's gang members steal two cars. The group of teenagers gathers on aLos Angeles lookout, with a cliff that drops down to the Pacific Ocean. James and Buzz are to drive the stolencars toward the cliff. The first person to jump from his car is declared the chicken (which is bad). The lastperson to jump is the hero (which is good), capturing Judy's affection and the gang's respect. The driverlesscars continue over the cliff and plunge to the rocks at its base.Each driver can make two possible actions. Jump when he feels endangered (be a chicken) or jump AFTERthe other driver jumps (be a rooster). Assuming that both feel endangered at the same moment, the followingmatrix represents the payoffs for James and Buzz for each choice of strategy.BuzzChicken RoosterJames Chicken 3, 3 -10, 20Rooster 20, -10 -50, -50 a. State all the dominated strategies in the full…

QUESTION 5 In recent years, technology has greatly improved our listening experience through better earphones and headphones. Some of the popular brands offering headphones with the latest technology are Suny and Base. Answer the following questions: a. A new company called Company X is planning to enter the market for headphones. Their headphones use the latest technologies and are able to rival many existing popular brands. There are many positive reviews for Company X and it is believed that their arrival will provide consumers more options when choosing a headphone. The arrival of Company X's headphones will probably result in the demand for existing headphones to be more Type I for Inelastic, E for Elastic or N for No changes. b. Company X is experimenting to decide the best price to sell their newest headphones. In a surveyed market, it is estimated that 685 headphones can be sold in a day if it is sold at a price of $366. If prices drop to $312, more headphones can be sold and…

14. (Figure: Payoff Matrix for Alex and Sybil) Use Figure: Payoff Matrix for Alex and Sybil. Alex and Sybil are the only producers of frozen yogurt in their town. Every week, each decides whether to price high or low for the following week. The figure shows the profit per week earned by the two businesses. Suppose the firms each decide to price high initially and adopt a Grim Trigger strategy for the following weeks. After a few weeks, Alex's weekly profit would be Payoff Matrix for Alex and Sybil and Sybil's weekly profit would be Alex charges a high price Alex earns $1,000 per week Sybil earns $1000 per week Alex earns $200 per week Sybil earns $1,500 per week Sybil charges a high price Sybil charges a low price a. $800; $800 b. $1,000; $1,000 c. $1,500; $200 d. $200; $1,500 Alex charges a low price Alex earns $1,500 per week Sybil earns $200 per week Alex earns $800 per week Sybil earns $800 per week If the movie theater

28. Type of product: Dozens of companies produce plain white socks. Consumers regard plain white socks as identical and don't care about who sells them their socks. The technology for producing socks is widely known, and any reputable person who wanted to start a sock manufacturing business could obtain a loan from a bank to buy the necessary machinery. * (1 Point) Differentiated Differentiated Standardized (ldentical) plain white socks. Consumers regard plain white Ils them their socks. The technology for producing 29. Unique

Firms compete in different types of market structures. In the real world, most markets are either monopolistically competitive or oligopolistic, and a few markets have a monopoly. Note that perfect competition is rare because no market has all the characteristics of a perfectly competitive market as described by the theory of perfect competition.  1. (a) What is a monopoly? Give an example.     (b) How many firms are there in the Internet provider market?          Is it easy or difficult for new firms to set up and compete in this industry? Explain.     (c) How do firms in the Internet provider market compete?

(Price Competition with Brand Loyalty) There are two firms, Firm A and Firm B, which produce cell phones at no cost. There is a continuity of consumers in the segment line [0, 3], where each point is a consumer. Each consumer will buy (at most) a phone if the price is less than r, where r> 0 is a fixed real number. Consumers in the interval [0, 1] are loyal to Firm A and will buy Firm A's phone if the price pA is not more than r. They will not buy anything if Firm A asks for a price pA above r. Consumers in the interval [2, 3] are loyal to Firm B and will buy Firm B's phone if the price pB is not more than r. They will not buy anything if Firm B asks for a price pB above r. The rest of the consumers (in the interval [1, 2]) are not loyal to any firm and will buy the phone only when the minimum price in the market is less than or equal to r and of the firm with the lowest price. If the two firms have the same price, half the unloyal consumers will buy from A and the other half of B.…

(15 marks) Public utilities, like local electricity providers, are likely natural monopolies. They are typically regulated by the government with a rate-of-return regulation. Explain why public utilities like local electricity providers are natural monopolies. Explain the economic rationale behind the rate-of-return regulation on a natural monopoly. Given your above arguments, discuss whether the government should regulate firms other than a natural monopoly with this method.

(Short-Run Profit Maximization) A monopolisticallycompetitive firm faces the following demand and coststructure in the short run:                                                                      a. Complete the table.b. What is the highest profit or lowest loss available tothis firm?c. Should this firm operate or shut down in the short run?Why?d. What is the relationship between marginal revenue andmarginal cost as the firm increases output?

Question: Widget is a commodity that is traded in a perfectly competitive global market that consists of many small price-taking firms. The firms fall in three categories with the following characteristics: Number of firms Capacity of firm's plant (units AVC (S per Fixed cost per unit at full per year) Capital charge per unit at full capacity ($/unit) unit) capacity ($/unit) Type 25 100 units 30 15 10 1 Туре 50 50 units 40 20 10 Type 100 40 units 45 25 10 3 Assume that each firm's AVC is constant up to the capacity of its plant. Further, assume that once built, a firm's plant has zero redeployment value. Finally, assume that a typical entrant has a cost structure identical to the Type 1 firms and that there are many potential entrants. • The demand for widgets is Q = 8000 - 20P, where P is $ per unit and Q is measured in units per year. (Remember: use only whole numbers, and do not use any other characters or spaces.) a. The short-run equilibrium price in the world widgets market is:…

1.Microsoft is one of the leading software companies. Prior to 2000, Microsoft’s share of the market for personal computer operating systems stood above 80 per cent. However, since the twenty-first century Microsoft’s market share has steadily declined to 40 per cent. This is due to the rise in competing software producers such as Apple macOS (10%), Google's Android OS (35%), Linux Operating System (35%), and Apple iOS (5%). The market share of each company is provided in parentheses. Google and Linux have decided that it would be in their best interest to work together to serve the market. This is not common knowledge to the person’s outside of the companies. i. Draw how equilibrium price and quantity are determined in this industry. Hi does this refer to the monopoly market structure diagrams? 2. Allsmart’s demand curve is given by Q=10-P for its dishwashers. The marginal and average cost is $3 per dishwasher produced. Complete the following table. Photo below concerns…

5. (b) Are the following statements true or false? Justify your answer (simply saying true or false will carry no credit). i) "A labor market dominated by a single buyer achieves Pareto efficiency if the buyer operates as a perfectly discriminating monopolist". ii) "A cake is divided between two individuals; Pareto optimality requires that they receive equal shares".

(KEY QUESTION) Bob is a magazine monopolist. His marginal cost of production (per magazine) is constant at $5. His demand information is as follows: Price ($) QD 50 40 30 10 20 20 15 30 10 50 5 102 2.50 200 a. Calculate the total revenue for Bob at each price. b. Calculate the (approximate) marginal revenue for Bob at each price. c. What is Bob's profit-maximising output level and price? Compare this with the perfectly competitive equilibrium level of output and price. d. (REAL-WORLD APPLICATION) Go to this useful graphics: www.scores.org/graphics/monopoly, and offer YOUR OWN views on the following questions: Is Google a monopoly? Should governments regulate Google? If so, how? (vou can use some other online resources to form vour views)