Reference no: EM13200833

1.) A. What is the shape of the demand curve faced by an individual firm operating under perfect competition? Why does the curve assume that shape?
B. If a firm operating under perfect competition cannot cover its variable costs in the short-run, will it continue to produce? Why? Explain.
C. What is the shape of the demand curve that the firm operating as a monopoly faces? How does the firm's demand curve differ from the industry demand curve? Explain.
D. Under monopoly, what is the relationship between price and marginal revenue? At what point does the firm produce in order to determine the output level and price required to maximize profits?
E. As a monopolist, a firm will produce a given output at a particular price in order to maximize its profits. What is the overall constraint, if any, on the monopolist with regard to price and the quantity produced?

2.) A. What is price discrimination? Why do firms engage in price discrimination?
B. What conditions are necessary in order to engage in price discrimination?
C. What is the relationship between price discrimination and price elasticity of demand? Explain.
D. Identify three examples of price discrimination.
E. Compare monopoly with perfect competition as it relates to price, output levels, and efficiency. Explain your answer.

3.) A. What are the key characteristics of monopolistic competition?
B. If in the short-run, firms in a particular industry experience profits that exceed a normal economic profit, what signal does this send to firms outside the industry? If firms choose to enter or exit the industry, do they do so in the short-run or the long-run? Why?
C. What is the relationship between a firm's attempt to distinguish or differentiate its product from competitors and price elasticity of demand?
D. Compare an industry operating under conditions of monopolistic competition with an industry operating under conditions of perfect competition as it relates to price, output levels, and efficiency.
E. Why is "Brand Name" important when a firm is operating under conditions of monopolistic competition? Is there a cost associated with the variety provided by firms operating under conditions of monopolistic competition? Explain.

4.) A. What are the key characteristics of the oligopoly market structure?
B. Assume that the cost of production for a firm operating under an oligopoly market structure falls. Explain the Kinked Demand Curve Model of Oligopoly in terms of the demand curve and marginal revenue curve faced by the firm, the issue of price elasticity of demand, and the likely strategy that will be undertaken by the firm.
C. Briefly, discuss the concept of the Prisoner's Dilemma Model of Oligopoly within the context of two competing firms deciding whether to advertise or not in order to increase revenues and profits. What will each do? Why?
D. Who is John Nash? How does Nash's Equilibrium change the concept of a dominant strategy under the oligopoly market structure?
E. What is a cartel? What are the conditions necessary for a stable cartel?

5.) A. What are the three key pieces of legislation associated with antitrust law?
B. Discuss how the United States Justice Department uses the Herfindahl Index as a guideline in launching suits against firms for violations of antitrust legislation.
C. Explain the difference between Social and Economic Regulation. In your opinion, which is more important? Why?
D. It has been suggested that regulations established to save lives can actually cause a reduction in lives. The theory suggests that regulation increases the costs of goods and services to lower-income groups and as a result of this increase, they in turn are unable to drive larger safer cars, eat as well as they should or visit doctors as often as they should. Discuss the relative merits of this theory. Do you agree with the theory? Why?
E. The author of your textbook discusses the concept of "Economic Freedom." In general terms explain the concept as presented in the text.

6.) A. Economic Theory tells us that regulation is inherently inefficient as compared to free markets. Why then does the government persist in imposing regulations on various industries?
B. In light of the inefficiency issue, should the Federal government insist on reforming the regulations on the financial industry currently in place? Why?
C. A story in the WSJ not too long ago suggested that the Justice Department might file legal actions against a number of large oil companies because there is evidence that they shared salary information on their professional and technical staff and agreed not to hire each other's employees. Should this be considered a violation of antitrust law? Why?
D. Multinational firms must now deal with regulations within various national borders and within the limits of regional trading blocs such as the EU and NAFTA. Is it likely that the WTO will ever be able to standardize such regulations? Explain.
E. In recent years courts within the U.S. have tended to follow the "rule of reason" approach in deciding antitrust cases as opposed to the "per se rule." Explain the difference between the two approaches. Which of the two do you favor? Why?