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11. Three oligopolists, A, B and C, produce an identical product, Q. Q is produced under conditions of constant costs, that is, AC = MC = $100. The market demand schedule for Q is: Price Quantity Demanded $1,000 0 950 25 900 50 850 75 800 100 750 125 700 150 650 175 600 200 550 225 500 250 450 275 400 300 a) A, B, and C decide to act illegally as a cartel, to divide the market equally among the three of them, and to set the price and output that will maximize their total profits. What price and output do they set? What is the output level that each of the firms agrees to? What profit is earned by each firm and by the three firms together? b) A is impressed with the honesty of B and C, and believes they will keep to their agreements. They do, and A cheats by increasing output by 25 units. What is the new market price? How have the profit levels of A, B, and C changed? How have total profits in the industry changed? c) What actions are B and C likely to take in retaliation? Show how these actions will affect the market price, and the profit levels of the three firms. d) What can you learn from this problem about the likely stability of a cartel?
Analyze the major barriers for entry and exit into the airline industry. Explain how each barrier can foster either monopoly or oligopoly. What barriers, if any, do you feel give rise to monopoly that will allow the government to become involved t..
Generally, which of the following is true? (where rE is the cost of equity, rD is the cost of debt and rA s the cost of capital for the firm.
Examine the basis for the trends in consumption patterns, as discussed in any article and explain what has occurred to change the demand for, or the supply of, the products, and market prices of those products.
Assume that keynesian model applies to the economy in the short-run. After the stock market fell sharply in 2008, the aggregate denabd decreased greatly around the world. using the aggregate supply and aggregate supply (ad-as) analysis, explain th..
How much does the economy have to grow (potential output is, 3.5% and the unemployment rate is 7.3%) in 2014 to bring the unemployment rate down to 5%? How much does it have to grow each year to bring the unemployment rate down to 5% by 2017.
Would you mind sharing with the class a simply numerical example showing how the CPI is calculated. What can you share with the class concerning the substitution bias associated with the CPI.
Explain the influences on channel selection
The head of the accounting department at a major software manufacturer has asked you to put together a pro forma statement of the company's value under several possible growth scenarios and the assumption that the company's many divisions will rem..
how do these factors affect the elasticity of demand and what would happen if there was a change in these factors
A "run on gasoline" occurs when consumers' fears of gas shortages in the future lead them to demand more gasoline now. Using supply and demand analysis, which of the following is consistent with this situation
Social welfare functions embody a normative conception of the relative importance of equity and efficiency'. With the aid of diagrams, illustrate and explain this proposition.
What would be the present value of an item that has a salvage value of $25,000 at the end of four years?Assume a discount rate of 3.8% for an end-of-year factor?
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