User Account

All Pages

monopoly help, Microeconomics

Assignment Help:
Monopoly and Oligopoly help?!?
1. Your firm sells a perfume. The daily demand for your perfume estimated by your economists is
given by
P=150-5Q
Your marginal cost is constant at $2 per bottle, fixed cost is 0, and ATC is also constant at $2.
(a) Write down the expression for Marginal Revenue.
(b) Choose the quantity and the price of a bottle of perfume to maximize your profit, assuming
that you can only charge one price.
(c) Compute the profit from part (b)
(d) Find the profit you could earn if you were able to perfectly price discriminate.
(e) An experienced salesman offers his service (help you perfectly price discriminate) for $800.
Based on c) and d), do you accept the salesman’s offer? Show work, and explain briefly.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
3. Your firm sells a perfume for women. You believe you can get more profit by capturing more
consumer surplus from each customer by implementing 2-part pricing at your store. Your
marginal cost is $2 per bottle of perfume. The demand of a representative customer for your
perfume is given by
P = 30 – 5Q
(a) Implement a 2-part pricing scheme for your perfume.
(b) Explain briefly why TOTAL profit (profit from entire sales) is still likely to be lower with this
pricing scheme than with perfect price discrimination, despite charging a fixed fee equal to the
entire Consumer Surplus of a typical consumer?
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
4. You and another firm are the only producers of plastic bags. You are firm 1 and the other firm is
firm 2. You are thinking about what price to charge next period, and have the following
information.
i. You have 2 choices—charge a high or a low price. So does firm 2.
ii. If you both charge a high price, you split the market and each earns a profit of $10
next period.
iii. If both charge a low price, you split the market again, but profit to each is $4.
iv. If one firm charges a high price while the other charges a low price, the high price
firm earns $-1 while the low priced firm earns $25. This is because the high priced
firm will lose most of the market.
Use the above information to answer the following questions.
(a) Draw the payoff matrix representing this one-time strategic interaction.
(b) Does your firm have a dominant strategy? Does firm 2? If so, indicate what this
strategy is for each.
(c) Given b., find the Nash Equilibrium outcome (actions, payoffs) for the one-time
interaction.
(d) Is the Nash Equilibrium the best outcome for both, i.e. is there an incentive for both
firms to cooperate instead? Show me this incentive (profit difference).
(e) What might prevent this cooperative outcome? Hint: think about conditions that
support cooperation.
(f) Bonus 1 point: (Thinking outside the box, not covered in class!) If these firms were
to merge, what would be the likely outcome? Explain briefly.

Related Discussions:- monopoly help

Cost curves, what are the various types of cost curves?

what are the various types of cost curves?

Schrodinger wave equation, The Schrodinger wave equation generalizes the fi...

The Schrodinger wave equation generalizes the fitting-in-of-waves procedure. The waves that "fit" into the region to which the particle is contained can be recognized "by inspect

Elasticity, what are the uses of cross elasticity quantity in demand/

what are the uses of cross elasticity quantity in demand/

Working capital, Working Capital: A business requires a certain revolving f...

Working Capital: A business requires a certain revolving fund of finance to pay for regular purchases of initial labour, raw materials and other inputs to production. Working capit

What is ceteris paribus, What is ceteris Paribus?  Ceteris paribus is a...

What is ceteris Paribus?  Ceteris paribus is a Latin phrase, literally translated as "other things the similar," and usually rendered in English as "all other things being equa

Preference toward risk, what is consumer''s choice involving risk.preferenc...

what is consumer''s choice involving risk.preference toward risk.

Bertrand paradox, Consider the following duopoly with differentiated goods ...

Consider the following duopoly with differentiated goods where x 1   and  x 2   denote the amounts of the goods 1 and 2  respectively, with prices p 1   and  p 2 . The demand funct

OLIGOPOLY, EXPLAIN KINKED DEMAND CURVE

EXPLAIN KINKED DEMAND CURVE

Parameters for assessing economic reforms, PARAMETERS FOR ASSESSING ECONOMI...

PARAMETERS FOR ASSESSING ECONOMIC REFORMS: Let it be clearly understood that liberalisation, privatisation and globalisation are means with the help of which the growth proces

Restrictions on international trade, Protection against dumping: It co...

Protection against dumping: It could be looked at as the export of commodities priced below cost of production. Dumping is generally looked upon as an unfair trading practice

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd