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Problem 1:
How can a manager of a supermarket maximise total revenue using various concepts of elasticity of demand? Use examples to illustrate.
Problem 2:
What are the distinguishing features of a market where firms are price takers? How would such a market characterized by imperfect competition? Use diagrams where appropriate.
Problem 3:
It is observed that some firms keep making profits in the long run despite no barriers to entry. Explain the reasons and possible strategies for such persistence.
Problem 4:
How can firms extract consumer surplus from their customers? Use examples to illustrate.
Problem 5:
(a). Explain why despite decreases in marginal cost, price may remain unchanged in an oligopoly setting. Use example to illustrate.
(b). Explain how equilibrium is reached in a Cournot model. Illustrate why would firms in such a model wish to collude? Use examples to illustrate.
(c). What factors can affect the decisions to sustain collusive agreements?
1. Consider a world with two assets: a riskless asset paying a zero interest rate, and a risky asset whose return r can take values +10% or –8% with equal probability. An individua
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solution of central problem of an economy
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critically analysis firm theory of profit maximization?
Risk Premium - The risk premium is amount of money which a risk averse person would pay to keep away from taking a risk. * Risk Premium: A Scenario - The person has a 5%
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