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- 5. Oligopoly terminology Suppose three companies, Optimax, Megachug, and Thirstoid, dominate the sports drink market. Optimax enjoys the largest market share. Each time Optimax changes the price of its sports drink, the other two firms match its price. This is an example of: O Price leadership O A price war O A cartelIn an oligopoly market, the firms would earn the highest profit if they chose to ignore the actions of rival firms. а. chose to produce an output equal to the perfectly competitive output level. b. chose to ignore the implications of game theory. С. chose to produce the output equal to the monopoly output level. d.Write down just example of how to help people overcome the Covid-19 situation using these concept ( commodity market,oligopoly market, game theory)
- If two businesses are selling the same good or service, who would benefit if theycooperated on pricing? Who would benefit if they competed based on pricing?How does advertising impact monopolistically competitive firms? (a) advertising always causes monopolistically competitive firms to experience lower average costs (b) it either causes a firm's perceiveddemand curve to become more elastic, or advertising causes demand for the firm's product to increase.In an oligopoly market, the firms would earn the highest profit if they A.chose to ignore the actions of rival firms. B. chose to produce an output equal to the perfectly competitive output level. C. chose to ignore the implications of game theory. D.chose to produce the output equal to the monopoly output level.
- The table is for a monopolistic competitive firm in the short run. What will the firm's profit equal in the long run? Question 1 options: $0 $91 $102 $228Monopolistically competitive firms can earn above-normal economic profits in the short run. (a) In a few sentences, explain what will happen in the long run that will prevent monopolistically competitive firms from continuing to earn above-normal economic profits.. What is the Nash equilibrium in this advertising war?a) Coke advertises; Pepsi does not advertise b) Pepsi advertises; Coke does not advertise c) neither of them advertises d) both of them advertise Explain the reasons for your answer? Was any other equilibrium position possible? advertise do not advertise pepsi-advertise coke profit=$50B coke profit =$20B PEPSI profit =$50B pepsi profit =$100B do not advertise coke profit =$100B coke profit =$80B pepsi profit =$20B PEPSI PROFIT =$80 B
- Question 20 In the market for a brand name medicine with a single company selling the medicine, that company is a_______Eventually, the government lets other companies sell the medicine as a "generic" alternative to the brand name. The effect of this increased competition is to_______ the medicine's price.O. monopoly, decreaseO. oligopoly, decreaseO. monopoly, increaseO. oligopoly, increaseDirections: Analyze and answer the questionsCompetitive PricingFirms need to take care when responding to competitor’s action with a pricing change,as this could trigger a potential price war. Therefore, in this activity you need to identifywhat would be the most appropriate pricing reaction for the following generic situationsactions.1. To communicate the high quality of your product against a new competitor2. The market that the firm operates in is deregulated (allowing more competitorsto enter)3. A new substitute product/industry emerges4. A major increase in production costs occurs5. The firm is looking to benefit from economies of scale6. When you know that key competitors will always match your price changes7. To increase market share significantly8. For one of the firm’s brands/products that has increased its brand equity9. When the firm’s product is experiencing high seasonal demand10.When a major competitor leaves the marketQUESTIONS1. For each of the above situations,…15. Match the description provided in the bank of options with the appropriate concept in the second table. Bank of options Letter A Consumers agree X is prefered to Y when both have equal prices Consumer preferences are changed Consumers obtain more information about product characteristics Consumers are targeted with advertising Characteristic that is consumed as complementary to product itself One time cost to enter an industry changes when the market size increases A firm that is a leader obtains a higher profit in a dynamic game One time cost to enter an industry is treated as a parameter of model A firm that is a follower obtains a higher profit in a dynamic game Consumers do not agree X is prefered to Y when both have equal prices Industry with monopoly and perfect competition characteristics An empirical model used to estimate product differentiation В C E F G H I J K Concept Second mover advantage First mover advantage Vertical product differentiation Horizontal product…