Cost (5)Please move point A to the minimum long-run average cost for a firm in an oligopoly and point B to the minimum long-runaverage cost for a firm in a purely competitive industry.LRACLRACисхABDemandWhy is the minimum long-run average cost important indetermining an oligopoly?It occurs at a small fraction of industry demand.It is at the lowest possible cost among all firms.It occurs at a large fraction of industry demand.Firms cooperate with each other to achieve thatlow cost.Quantity

The minimum LRAC is critical in an oligopoly because it affects barriers to entry, influences…

Answered: Cost (5) Please move point A to the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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8. There are several identical firms in a market. The cost function of firm i is q? +q, where q; is the output of this firm, and q is the sum of other firms' output. The market 5 demand is q(p) =-1 p. We assume that all firms are Cournot oligopolists, and the market is free entry. In equilibrium the number of firms in the market is А. 5 В. 4 С.3 D. 2
Oligopolistic Competitive Demand: Would the following factors increase or decrease the ability of domestic oil companies to raise prices and profit margins? Why? A. Train Law: excise tax B. Increased price of automobiles C. Increased import tariffs (taxes) D. A rising value of the dollar
What is the concentration ratio?
Determine which of the three principle sources of wage differentials is most likely to account for each scenario. * A licensed physician earns more than a nurse: differences in total human capital compensating differentials differences in talent or ability * City sanitation workers earn more than park maintenance workers: compensating differentials differences in talent or ability differences in total human capital * Physical therapists earn more than massage therapists. differences in talent or ability compensating differentials differences in total human capital * Jack, a 22-year-old soccer player, earns more than Jim, who is the same age and has the same level of experience. compensating differentials differences in total human capital differences in talent or ability
Ch 24 Economics If there are two firms Atlas and Bowden in this market with the same earlier total cost function of TC = 500 + 10Q^2 , demand function of P(q)= 220-10q and they engage in Cournot competition, what is each firm's equilibrium quantity, price, and profit? [NB: round quantities to nearest integer to find equilibrium quantity, price, and profit
4
5
2. What are the behavioral assumptions in oligopoly that lead to an individual oligopolist firm facing a kinked demand curve? What's the key take-away of the kinked oligopoly model?
The table below shows revenue data for different firms producing cell phones. Use the given information to determine the 4 Firm Concentration ratio. Firm Revenue in $ Market Share in % Aardvark Inc 490 19 Buzzy Co 11 285 Cran Inc 310 12 Delta Co 460 18 Echo Co 505 20 Farriss Co 515 20 What is the Four Firm Concentration Ratio? Is this market concentrated? OYes ONo EPIC
Consider a duopoly market with 2 firms. Aggregate demand in this market is given byt Q = 500 – P, where P is the price on the market. Q is total market output, i.e., Q = QA + QB, where QA is the output by Firm A and QB is the output by Firm B. For both firms, marginal cost is given by MC = 20, i=A,B. « Assume the firms compete a la Cournot. e a) Find the inverse demand in this market. Note that marginal revenue for both firms is given by MRA=500-2QA-QB, MRB=500-QA-2QB. b) Describe what a best-response curve is and how to find it. c) Derive the best-response function for each firm. d) What are the equilibrium quantities? e) What is the total quantity supplied on this market? f) What is the equilibrium price in this market?
6. Consider a duopoly in which inverse demand is given by P= 100-Q, where Pis the price and Q is aggregate output. The marginal cost of each firm is initially equal to 55 and there are no fixed costs. The firms compete by simultaneously setting quantities. (a) What is the equilibrium quantity of each firm, the equilibrium price and the profit of each firm? Now assume that one of the firms, firm 1, develops a new technology that reduces its own marginal cost to 25. (b) If firm 1 keeps this innovation for itself (so that the marginal cost of firm 2 is still 55), what will be the new equilibrium levels of output, price and profits of the two firms? What is the consumer surplus in the market? Do consumers benefit from the innovation?
What is the name for a group of firms operating in an oligopoly that have a formal agreement to collude to produce the monopoly output and sell at the monopoly price? O Cartel O Collusion Trust Union O Trade Organization

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