practice for the midterm exam. Problem 2: Suppose that demand is given by P = 600 − Q and marginal cost equals 20. Firms are Cournot competitors and play a supergame. The collusive agreement being considered is for each to produce one-fourth of the monopoly output (there are 4 firms in this industry). What is the critical discount factor to sustain collusion using grim punishment strategies if detection of deviation requires three periods? Problem 3: Suppose that demand is given by P = 600 − Q and
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then argued that the market had to be defined to include all substitutes. This broadened the definition of the market to the point where DuPont’s market share was small.___ 2. What had Alcoa done that made the judge find it guilty of being a monopoly? _ It had a market share above 90%_. Did the judge rule that Alcoa was a “dirty” firm? _ No ___ 3. Why did the verdict in the U.S. Steel antitrust case confuse everyone? __ U.S. Steel was ruled to be “reasonable” under the courts “Rule of
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Practice Exam Multiple choice questions. 1) Which of the following statements about natural monopoly is correct? A) A natural monopoly’s average cost is decreasing. B) A natural monopoly’s marginal cost is decreasing. C) A natural monopoly usually has a small fix cost. D) Governments usually want to ban natural monopoly. 2) Which of the following statements about perfect price discrimination is correct? A) A firm in a perfect competitive market can apply perfect price discrimination
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Public justification of regulatory actions by the government appears to be based on private monopolization fear of an economic activity area. There are several available regulatory options. In Australia‚ the common approach is creating a monopoly that is owned by the government‚ which is assumed to act in the interest of the public. The Australia’s Two-Airline policy consists of two firms‚ which function within an industry with barriers of entry. One firm is government owned (Trans-Australia Airlines)
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Week 4 Individual Assignment Market Structure Microeconomics 365 Week 4 Individual Assignment Market Structure Perfect competition Monopoly Monopolistic competition Oligopoly Example organization Grocery Stores (Piggly Wiggly) Alliant Energy Under Armor Ford Motor Company Goods or services produced by the organization Sells food and other house hold necessities Electric Power company Sporting Goods (clothing) Automobiles Barriers to entry Very low High Moderate
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Microeconomics Monopolistic vs. Oligopolistic Monopolistic and Oligopolistic are pretty much the same except for the size of the manufacturing companies. In simple terms‚ a monopoly is where there is a single seller in the marketing industry and an oligopoly is where there is small group of sellers in the same field in marketing industries. When it comes to a monopolistic competition‚ this is where a market structure has a large number of sellers‚ each of which is
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Lecture VII L t THE MONOPOLY The market equilibrium – REPETITION lecture VI E 20 D e supply d Cc 16 price 12 b 8 B a 4 A demand 0 0 100 200 300 400 500 600 700 800 Quantity The minimal price and shutdown point – repetition lecture V P MC AC AVC P = MR Pmin Pshutdown Qshut Qmin QE Q Demand and Marginal Revenue Faced by a Competitive Firm - repetition Price $ per bushel Firm Price $ per bushel Industry $4 d
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now‚ we have covered two extreme types of markets. We covered perfect competition with the highest degree of competition‚ then we covered monopoly with the lowest degree of competition. Now‚ we will cover oligopoly and monopolistic competition. These two market types are in between two extremes: they show some features of competition and some features of monopoly. Oligopoly Definition: Oligopoly is a market structure in which there are a few sellers and they sell almost identical products. There
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popularity of auctions as a device for allocating scarce resources among competing ends. Monopoly A monopoly is a market structure in which there is only one producer/seller for a product. In other words‚ the single business is the industry. Entry into such a market is restricted due to high costs or other weaknesses‚ which may be economic‚ social or political. For instance‚ a government can create a monopoly over an industry that it wants to control‚ such as electricity. Another reason for the barriers
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most important personal objective * Growth objective * Profit maximization * Model * Economic profit ≠ accounting profit Market structures * Perfect competition * Monopolistic competition * Oligopoly * Monopoly Perfect competition * Many (small) suppliers and buyers: ‘price takes’ * Demand function for individual company * Products are perfect substitutes * Free entry and exit * Information is perfect (available to all no
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