03.11 Oligopoly
03.11 Oligopoly
FRQ 1
3/6 points earned
a. 2 points; The student stated that the North will be better for Blue Mart, and he stated that Blue Mart earns $4,000 locating North compared to the $1,000 it earns South.
b. 0 points; The student incorrectly claimed that moving South was a dominant market strategy, and he did not explain how Red Shop’s best strategy depends on Blue Mart’s move.
c. 0 points; incorrectly stated that Red Shop would locate North and Blue Mart would locate South Red Shop would locate North.
i. 1 points; correctly draw the table with the incentive.
FRQ 2
9/12 points earned
a. 4 points; -graph correctly label, and all the 3 other points for correctly showing the profit-maximizing Q at MC = MR, P on demand curve above MC=MR, and profit in correct area.
b. 0 points; The student failed to state that the demand curve is price elastic and that MR is positive, so TR rises if P is decreased.
c. 2 points; the student stated that the demand curve would shift to the left, and gave correct explanation.
d. 1 point; correctly showed long-run equilibrium is in slight contact of ATC
e. 1 point; answered “no” correctly with a acceptable explanation
f. 1 points; doesn’t explain allocative price efficiency correctly
FRQ 2
a. 4 points; The student correctly labeled the graph, included a downward sloping demand curve and a marginal revenue curve below the demand curve. The student also correctly showed Q* and P*, and correctly labeled the area of profit.
b. 0 points; The student failed to state that the demand curve is price elastic and that MR is positive, so TR rises if P is decreased.
i. 2 points; The student stated that the demand curve would shift to the left, or “inwards,” and explained that this occurs because of the entry of new firms.
d. 1 point; The student correctly identified the profit-maximizing quantity
e. 1 point; The student correctly answered “no” with a correct explanation
f. 2 points;
FRQ 1
3/6 points earned
a. 2 points; The student stated that the North will be better for Blue Mart, and he stated that Blue Mart earns $4,000 locating North compared to the $1,000 it earns South.
b. 0 points; The student incorrectly claimed that moving South was a dominant market strategy, and he did not explain how Red Shop’s best strategy depends on Blue Mart’s move.
c. 0 points; incorrectly stated that Red Shop would locate North and Blue Mart would locate South Red Shop would locate North.
i. 1 points; correctly draw the table with the incentive.
FRQ 2
9/12 points earned
a. 4 points; -graph correctly label, and all the 3 other points for correctly showing the profit-maximizing Q at MC = MR, P on demand curve above MC=MR, and profit in correct area.
b. 0 points; The student failed to state that the demand curve is price elastic and that MR is positive, so TR rises if P is decreased.
c. 2 points; the student stated that the demand curve would shift to the left, and gave correct explanation.
d. 1 point; correctly showed long-run equilibrium is in slight contact of ATC
e. 1 point; answered “no” correctly with a acceptable explanation
f. 1 points; doesn’t explain allocative price efficiency correctly
FRQ 2
a. 4 points; The student correctly labeled the graph, included a downward sloping demand curve and a marginal revenue curve below the demand curve. The student also correctly showed Q* and P*, and correctly labeled the area of profit.
b. 0 points; The student failed to state that the demand curve is price elastic and that MR is positive, so TR rises if P is decreased.
i. 2 points; The student stated that the demand curve would shift to the left, or “inwards,” and explained that this occurs because of the entry of new firms.
d. 1 point; The student correctly identified the profit-maximizing quantity
e. 1 point; The student correctly answered “no” with a correct explanation
f. 2 points;