(c) Consider an oligopoly. Suppose that one of the firms has the option to move before its opponents (instead of the firms deciding simultaneously). Statement: the firm will never strictly prefer to forgo this option. (d) It is optimal for a monopolist to choose a quantity such that ea < 1.
(c) Consider an oligopoly. Suppose that one of the firms has the option to move before its opponents (instead of the firms deciding simultaneously). Statement: the firm will never strictly prefer to forgo this option. (d) It is optimal for a monopolist to choose a quantity such that ea < 1.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
part C D
Transcribed Image Text:Exercise 1
Are the following statements true, false, or uncertain? Provide a brief explanation.
(a) Some consumers strongly prefer Coke and some strongly prefer Pepsi. Statement: this means that
Coke and Pepsi are not in the same market.
(b) Consider a Cournot duopoly: demand is P(q1, 92)=40-91-92, marginal costs are constant at c = 10
for both firms. Statement: for any player, choosing a quantity q = 12 is a dominated strategy.
(c) Consider an oligopoly. Suppose that one of the firms has the option to move before its opponents
(instead of the firms deciding simultaneously). Statement: the firm will never strictly prefer to forgo
this option.
(d) It is optimal for a monopolist to choose a quantity such that Ed < 1.
(e) The elasticity of demand for petrol is = -2.4. The price of petrol is £5 per gallon and sales are 1
million gallons (per month). Statement: if the price of petrol falls by 1 percent, sales revenue will fall.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education