Total Cost Output (Bushels of Corn) Price $100 $75.00 12 $175 S69.00 42 $250 S54.00 56 $325 $47.00 66 $400 $42.00 74 $475 $38.00 80 S550 S35.00 84 $625 $33.00 87 $700 $31.50 Table 2: Total cost, prices, and output for monopolistic corn farm Now suppose that the same corn farm were to have a monopoly over corn. (Or perhaps they were able to convince consumers that their corn was unique, so the market may in fact be monopolistically competitive.) Table 2 lists the total costs and outputs from Table 1 as well as the market demand curve (prices) that the monopolistic farm faces. What is the profit-maximizing level of output for the farm now that they are a monopoly? Hint: You will not find a point where MR = MC exactly. Instead, think of it this way: the farm will increase output so long as MR > Mc. If the next level of output results in MR < MC, the firm should not produce that next level of output. Answer: In reference to the previous problem, should the monopolistic firm shut down in the long run? O a. Yes O b. No Oc. Not enough information

Total Cost Output (Bushels of Corn) Price $100 $75.00 12 $175 S69.00 42 $250 S54.00 56 $325 $47.00 66 $400 $42.00 74 $475 $38.00 80 S550 S35.00 84 $625 $33.00 87 $700 $31.50 Table 2: Total cost, prices, and output for monopolistic corn farm Now suppose that the same corn farm were to have a monopoly over corn. (Or perhaps they were able to convince consumers that their corn was unique, so the market may in fact be monopolistically competitive.) Table 2 lists the total costs and outputs from Table 1 as well as the market demand curve (prices) that the monopolistic farm faces. What is the profit-maximizing level of output for the farm now that they are a monopoly? Hint: You will not find a point where MR = MC exactly. Instead, think of it this way: the farm will increase output so long as MR > Mc. If the next level of output results in MR < MC, the firm should not produce that next level of output. Answer: In reference to the previous problem, should the monopolistic firm shut down in the long run? O a. Yes O b. No Oc. Not enough information

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Let's say we have a game called "guess 2/3 of the average," where players can choose any number x ∈ [0, 100]. 5% of players are at level N0, 40% at level N1, 35% at level N2, 15% at level N3, and 5% at level N4. Players at level N0 choose a number randomly, while players at higher levels choose a number according to their beliefs, which are as follows: players at higher levels believe that all other players are one level lower than themselves. (a) What will be the winning number and which level players will be the winners? (b) Under the assumptions of classical game theory, the mentioned version of the game "guess 2/3 of the average" has exactly one equilibrium, in which everyone chooses the number 0. Prove that this outcome is indeed a Nash equilibrium of the game.
Q19
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Nn3 Suppose an incumbent monopoly firm currently earns a profit of $50,000 per period. A potential entrant could enter and make a profit of $15,000 per period while also lowering the incumbent’s profit to $20,000 per period. The monopoly firm could seek to engage in predatory pricing, which would lead to both firms earning a loss of $5,000 per period. (a) Is there a Nash Equilibrium in this game? If so, what is it? (b) Discuss how this game might play out in the real world?