Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Consider an industry that consists of two firms, A and B. They face a demand curve q = qA + qB = 14 - p, where p is the industry price of output. Both firms have constant average and marginal cost of $2. (a) Suppose they form a cartel and choose the price that maximizes the sum of their profits. Show that they will choose p = $8. (b) Now suppose that instead of forming a cartel, they choose prices simultaneously. If they choose different prices, the firm that chooses the lower price captures the entire market; if they set the same price they split the market evenly. Suppose they play this game once. Show that in a Bertrand equilibrium, both firms will charge $2. (c) Suppose they play this game an infinite number of times. Consider the following grim trigger strategy. Choose the cartel price (i.e., $8) in the first period. Continue to choose the cartel price in subsequent periods if your opponent has always chosen the cartel price up to that point. If your opponent ever chooses a price other than $8, choose the Bertrand price (i.e., $2) from that point forward. For what range of values of the discount factor do these trigger strategies constitute a subgame perfect equilibrium? (d) Now change this game so that there are N ≥ 2 oligopolists; thus if they all charge the same price, each will sell a proportion 1/N of the market demand at that price. Express the critical discount factor as a function of N. Does your answer suggest that it will be easier to sustain cooperation when N is small or when N is large? What is the intuition behind this result?
In the long run with free entry and exit, is the price in a market equal to marginal cost, average total cost, both, or neither?
A firm’s stockholders expect an 18% rate of return, and there is $22M in common stock and retained earnings. The ?rm has $9M in loans at an average rate of 8%. The firm has raised $14M by selling bonds at an average rate of 4%. What is the firm’s cos..
Why do national income accountants compare the market value of the total outputs in various years rather than actual physical volumes of production? What problem is posed by any comparison over time of the market values of various total outputs? How ..
What is your thought about tracking the U.S. Economy and Unemployment and Inflation.
The American Baker’s Association reports that annual sales of bakery goods last year rose 15 percent, driven by a 50 percent increase in the demand for bran muffins. Most of the increase was attributed to a report that diets rich in bran help prevent..
At the moment, the market is completely ignoring things like record US trade deficits and the widening current account deficit. It is also largely ignoring the possibility of Federal Reserve rate cuts. In what way is fiscal easing in Japan relevant h..
Home Interiors has net income of $248,000. The firm has decided to pay $160,000 of that income out to the shareholders. What is the firm's retention ratio? Art Supplies has a net income of $138,600. The firm has $1.25 million in assets and $500,000 i..
Suppose that two countries are exactly alike in every respect except that the citizens of country A have a higher depreciation rate than the citizens of country B. a) Which country will have the higher level of output per worker in the steady state?
q.a corporation is allowing for building a bridge across a river. the bridge would cost 2 million to build as well as
What are the most important religious themes and people that Islam, Judaism, and Christianity have in common? Describe and discuss issues of current concern for Muslims around the world, and the relationship between various schools of Muslim thought.
In what sense can this be said to be unfavorable to the trade partner. Does this mean that the welfare of the trade partner has definitely declined.
Texas governor Rick Perry promised to put hundreds of cameras on the Texas-Mexico border and broadcast the video over the Web so anyone, anywhere could become a border patroller, helping root out border crime and illegal crossings. if the 200 cameras..
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd