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2. Explain two potential benefits and two potential difficulties for firms engaging in collusion.
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- 14. Suppose a manufacturer and its retailer face the problem of double marginalization described in my notes, Section 11.1. If the manufacturer sets the wholesale price equal to its marginal cost c and in addition, requires the retailer to pay a fraction a (between 0 and 1) of its profit. Write down the retailer's profit maximization problem. Will this practice solve the double marginalization problem? (That is, will this 4.a practice maximize their joint profit?) 4.k Suppose the retailer is required to pay a fraction of a of its sales (i.e., total revenue). Write down the retailer's profit maximization problem. Will this practice solve the double marginalization problem?What is the government's policy on collusion in the United States? Explain the rationale for this policy. In the United States A. the government makes collusion illegal with antitrust laws because monopolies create deadweight loss OB. the government encourages collusion with subsidies because resulting profits can be used to develop new products. OC. the government makes collusion unnecessary with government-imposed barriers to entry because monopolies enhance economic efficiency OD. the government makes collusion legal with antitrust laws because monopolies create no deadweight loss. OE. the government promotes collusion with the Federal Trade Commission because perfectly competitive markets enhance economic efficiency.
- 3. Firm A and Firm B are two firms in an industry. Firm A and Firm B are planning to merge. (a) Firm A and Firm B are Bertrand duopolists with identical and constant marginal costs. Post-merger marginal cost is lower than pre-merger. Use a figure that includes a downward-sloping linear market demand to show how the merger of Firm A and Firm B will lead to anticompetitive losses as well as cost-savings. (b) Firm A and Firm B are Cournot duopolists with identical marginal costs. Post- merger marginal cost is the same as pre-merger. Use a figure that includes a downward-sloping linear market demand to show how the merger of Firm A and Firm B will lead to anticompetitive losses. (c) Firm A and Firm B are Stackelberg competitors with identical marginal costs. Post-merger marginal cost is the same as pre-merger. Firm A is the Stackelberg leader. Use a figure that includes a downward-sloping linear market demand to show how the merger of Firm A and Firm B will lead to anticompetitive losses.…Suppose tuition fees for a university increase from £3,000 to £9,000. Afterthe increase, enrolment drops by 5%. e) Explain why setting up a cartel and maintaining collusion may be difficultin general.f) Explain how a maximum tuition fee of £9000 imposed by the governmentmay facilitate collusion between universities.4
- Handwritten asap plzzzzzz...solve 20 mins..i"ll give you more votesWhen comparing two firms operating as a cartel/colluding and two firms competing in Cournot competition, given the firms face the same inverse market demand and marginal cost is the same for both firms in either situation, which of the following is true? а. The total profit is the same in Cournot competition and collusion. O b. Total output is higher in collusion than in Cournot competition and the price is lower in collusion than in Cournot Competition. Ос. The total profit is lower in Cournot competition than in collusion. O d. Total output is lower in collusion than in Cournot competition and the price is higher in collusion than in Cournot Competition.G The formula t xC Where Does X b My Questions X BC Broward C cmillanlearning.com/sac/5078081#/5078081/12/-1 Completed 16 out of 20 Question 13 of 20 > Which of these will contribute to a cartel's stability? O a copyright Obrand differentiation O ease of entry into an industry O having few members with similar goals Rain 五0
- 4. We assume that there are two countries, X and Y, each has a monopolistically competitive Home Appliance Market. By using the data of the Table below, define and specify the main effects of the Krugman's Model. Home Appliance Home Appliance Market Market in Integrated Market in Country X Before Trade Country Y Before Trade After Trade Total Sales of Home 700,000 1,300,000 2,000,000 Appliance Number of firms Sales per firm Axarage Cost Price 8. 116,000 162,500 222,000 15,000 12,000 10,000 15,000 12,000 10,000explain how google has the characteristics of a monoply market structure5. Two duopolistic oil producers are faced with the total demand function of P = 180– Q and the following cost functions: MC1 = 30 + Q1 MC2 = 20 + 2Q2 a. Determine the optimal levels of output, using the Cournot solution. b. What are the optimal outputs, if the two firms form a cartel