6. If the only two firms in an industry successfully collude to maximize their joint profit, the price for the product will be (A) equal to the marginal cost of production (B) equal to the average total cost of production (C) above the marginal cost of production (D) above the monopoly price (E) below the average variable cost of production

6. If the only two firms in an industry successfully collude to maximize their joint profit, the price for the product will be (A) equal to the marginal cost of production (B) equal to the average total cost of production (C) above the marginal cost of production (D) above the monopoly price (E) below the average variable cost of production

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter9: Market Structure And Long-run Equilibrium

Section: Chapter Questions

Problem 9.4IP

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a. They compete in quantities with each other (Cournot-Nash equilibrium). b. They collude as though they are all plants of the same single multi-plant monopoly. c. B and C act as two plants of a single multi-plant monopoly “B+C”, which competes in quantities (Cournot competition) against A.
(a) There are two companies in the world that produce large passenger aircraft, Boeing, and Airbus. How would you characterize the market for large passenger aircraft, monopoly, perfectly competitive, monopolistically competitive or Oligopoly? Please explain. Large passenger aircraft are defined as aircraft than can carry more than 150 passengers. (b) The market for telephone services has become more competitive over time with the advancement of technology in the industry. Technology in the aircraft manufacturing industry has also advanced significantly. Why hasn’t this improvement in technology led to an increase in competition (Boeing and Airbus have been the only manufacturers in this industry for many years)? Please explain.
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1. Consider two duopolists who each have a constant marginal cost c = e2 = 3 and face inverse demand P = 15 – Q,where Q = Q1 + Q2 is the total output of both firms. 1. Find the Cournot equilibrium quantity for each firm, the resulting market price, and the profits for each firm. 2. Find the Stackelberg equilibrium quantities for each firm, and the price, and the profits for each firm supposing that Firm 1 is the industry leader. 3. Suppose that Firm 2 figures out a way to lower its marginal cost to ez = 0 while firm 1 still has a marginal cost equal to 1: c = 3. How does this affect the Cournot equilibrium quantities, price, and profits? 4. How does this affect the Stackelberg equilibrium (with Firm 1 still as the leader) quantities, price, and profits?
3. for two firms that share a market if demand p=300-q where q is the total quantity sold and fixed cost is 300 and MC is 20 and suppose if the firms are in collusion and the first firm decides to cheat ,how much will the first firm produce ,what will its "p " be and profit be and how much will it exceed the second firm.Also then if both firms collude but both cheat then what will each firm make profit?
For each statement in the left column find and match convenient part from the right column of the table: Write your answer A. The market, represented by a group of sellers, unified by an agreement on its segmentation and final price of the production, is considered as ... 1. ... for the oligopoly B. The situation in which society undergoes losses due to high prices and low output is more typical for ... 2 ... for the price discrimination C. The market in which several sellers can affect and control the price of products in an industry is typical for ... 3. ... for the price competition D. The situation when a different price is given for the same product is typical for ... 4. ... for the market of imperfect competition E. Limited resources is the main factor determining the situation typical for ... 5. ... for the perfect competition F. The absence of the supply curve is typical for... 6. ... for the cartel…
(i) They compete in quantities with each other (Cournot-Nash equilibrium) (ii) They collude as though they are all plants of the same single multi-plant monopoly. (iii) B and C act as two plants of a single multi-plant monopoly “B+C”, which competes in quantities (Cournot competition) against A.
1
Assume firms' marginal and average costs are constant and equal to c and that inverse market demand is given by P = a - bQ where a, b > 0. Suppose now the market is served by 2 firms (one leader, and one follower) that choose quantities for their identical products. Calculate: i. ii. iii. iv. The Nash equilibrium quantities for the Stackelberg duopolists Market output Market price Firm profit
Firms like Papa John’s, Domino’s, and Pizza Hut sell pizza and other products that aredifferentiated in nature. While numerous pizza chains exist in most locations, thedifferentiated nature of these firms’ products permits them to charge prices abovemarginal cost. Given these observations, is the pizza industry most likely a monopoly,perfectly competitive, monopolistically competitive, or an oligopoly industry? Use thecausal view of structure, conduct, and performance to explain the role of differentiationin the market for pizza. Then apply the feedback critique to the role of differentiation inthe industry.
d. How much output would be produced if the market were monopolized?e. Suppose you and your rival agree to a collusive arrangement in which each firm produces half of the monopoly output. (1) What is your output under the collusive arrangement? (2) What is your optimal output if you believe your rival will live up to the agreement?
part D E