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Assume the market demand curve in an industry is characterized by P=1-Q, where P is the market price and Q is the total quantity supplied to the market. Assume there are three firms in this industry. All have a zero marginal cost of production.
1. In a one-shot interaction, what is the Cournot quantity for each firm?2. What is the profit level associated with the Cournot quantity for each firm?
Now consider an infinitely repeated version of the above game. Suppose that the firms agree to act collectively as a monopolist. All firms have the same discount factor .
3. How much will each individual firm produce under the cartel arrangement?4. How much profit will each individual firm make under the cartel arrangement?5. Suppose a firm decided to cheat on the cartel arrangement. How much would it produce i.e. what is the best possible deviation it could make? How much profit would it get from making this deviation?6. How big does the discount factor have to be in order to support the cartel arrangement through the threat of playing Cournot forever as punishment for deviation?7. Compare this with the two firm case. Is the delta that supports the two-firm case higher or lower than the three-firm case i.e. is it easier to support a cartel with two firms or with three firms? Explain.
Explain how will these events impact the equilibrium price and quantity of generic soft drinks.
Discuss how each of the following developments would affect the supply of the money, the demand for money, and the interest rate. For each case, describe what happens in closed economy and in small open economy. Describe your answers with diagrams.
Consider the following situations. Evaluate how they would affect the level of productivity of labour.
Clipit utilize this advantage to be the first to choose its profit-maximizing output level in the market.
Plot both together on a supply-demand graph. Calculate the equilibrium P and Q, and show them on your graph as well. Also calculate CS (consumer surplus) at the equilibrium.
The following is a list of figures for a given year in billions of dollars. Calculate the GDP and NI.
Exchange and markets, Demand supply and market equilibrium
I understand the three types of unemployment are: frictional unemployment, seasonal unemployment, and structural unemployment.
Suppose a monopolist with cost function C (Q) = 3Q selling to 2 segments of consumers where Q is total output produced by the monopolist in both markets. If the monopolist can use a single two-part tariff, compute the two part tariff that will maxim..
Explain why is an increase in the number of varieties of a good regarded as a gain from trade. Can you think of economic disadvantages associated with greater product variety.
Provide one example of a good the US would be considered to have a comparative advantage in producing. Why do you think the U.S. has this comparative advantage.
Assume that you are the chief economic advisor to the president of the U.S..
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