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Question1- Define and give an example of perfect price discrimination. Describe how price regulation may improve the performance of monopolies. In your answer distinguish between (a) socially optimal (marginal cost) pricing and (b) fair return (average and total cost) pricing.
Question2- How does monopolistic competition differ from pure competition in its basic characteristics? From pure monopoly? Explain fully what product differentiation may involve. Explain how the entry of firms into its industry affects the demand curve facing a monopolistic competitor and how that, in turn, affects its economic profit. Why is there so much advertising in monopolistic competition and oligopoly?
Question3- Why do oligopolies exist? List 3 or 4 oligopolists whose products you regularly purchase. What distinguishes oligopoly from monopolistic competition? Why might price collusion occur in oligopolistic industries? Assess the economic desirability of collusive pricing. What are the main obstacles to collusion? Speculate as to why price leadership is legal in the United States, whereas price fixing is not.
A country should engage in international trade when the country can give up fewer goods for imported item than is implied by the item's domestic opportunity cost of production.
What are the advantages and disadvantages of the oligopolistic structure? How would an increase in a monopolist's fixed costs affect its profit-maximizing choice of price and quantity?
What are three main factors of production? Who are the main economic decision makers in a Markey system? Can firms and households resolve problems by cooperating with each other?
A new competitor enters the industry and competes with a second firm, which had been a monopolist. The second firm finds that although demand is not perfectly elastic, it is now relatively more elastic.
Assume you are a stock market analyst specializing in the stocks of theme parks, and you are analyzing Disneyland's stocks. The Wall Street Journal reports that tourism has slowed down in the US.
A firm uses two plants (A and B) to produce the product. The plant's marginal cost functions are given by the following equations:
What is the solution to the firm's long-run cost-minimization problem given that the firm wants to produce Q units of output and long-run competitive equilibrium, how much output will each firm produce
You're the manager of monopoly. A typical consumer's inverse demand function for your firm's product is P=100-2Q and your cost function is C(Q)=20Q. Find out the optimal two part pricing strategy.
From an economist standpoint, why might there be more research, development, and innovation occuring in oligopolistic market structure than in any other?
Cost-Plus Pricing. Wendel Stove Company is developing a "professional" model stove aimed at the home market. The company estimates that variable costs will be $2,000 per unit and fixed costs will be $10,000,000 per year.
Farmers have a relatively inelastic demand for their crops. Suppose there is a bumper crop year (an unusually large harvest).
Describe why personalized pricing or 1st degree price discrimination is g enerally more profitable than menu price. Why, if this is the case, do companies use menu pricing?
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