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

Elasticity, -1- ASSIGNMENT #1 The demand function for Product X is given by...

-1- ASSIGNMENT #1 The demand function for Product X is given by: Qdx = 80- 2Px- 0.05P²x -0.2Py + 4Pz + 0.01I+ 2A Where: Px Price of good X $120.00 Py Price of related good y $100.0

Comparison with other countries, Comparison with Other Countries: The ...

Comparison with Other Countries: The basic purpose of this type of comparison is that: (i) it helps us to know the potentials of growth that can be built up in an economy,

What is a natural monopoly, What is a natural monopoly Define natural m...

What is a natural monopoly Define natural monopoly as a situation where the advantages of scale a fixed costs are so high that it is impossible to fully exploit them. MC and AC

What is corporation, Q. What is Corporation? A corporation is a form of...

Q. What is Corporation? A corporation is a form of business established as an independent legal entity, separate from individuals who own it. A main benefit, for owners, of thi

Tools for management decisions, what are the tools for decision making

what are the tools for decision making

Market structers, what are the majotr sources of monopoly

what are the majotr sources of monopoly

Elasticity, if australian governmrnt imposed a sales tax on petrol by $0.25...

if australian governmrnt imposed a sales tax on petrol by $0.25, then the price of petrol will rise by 0.25. consumers can not get by without petrol, so they have to pay the whole

Shifts the market supply curve, This firm will maximize profits by producin...

This firm will maximize profits by producing the level of output that corresponds to point: a. b. c. or d. ??   Refer to Figure for a perfectly competitive firm. Given the

Non-accelerating-inflation rate of unemployment, Non-Accelerating-Inflation...

Non-Accelerating-Inflation Rate of Unemployment (NAIRU): This theory is a variant of neoclassical natural rate of unemployment. As in original natural rate theory, NAIRU advocates

Long run equilibrium, In the short run, the size of the plant is fixed wher...

In the short run, the size of the plant is fixed whereas in the long run a firm can adjust its plant size. One of the choices in the long run will be the short run plant size. That

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