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

Elements of economics, discuss scarcity,choice and opportunity cost

discuss scarcity,choice and opportunity cost

Explicit costs are accounting costs, An economist's view of costs contains ...

An economist's view of costs contains both explicit and implicit costs.  Explicit costs are accounting costs, and implicit costs are the opportunity costs of an allocation of resou

Visit to village panchayat for agricultural based project., related documen...

related documents, photos,paper for permission from court etc.

Human numbers grew as the population after 1800, Human numbers grew as the ...

Human numbers grew as the population after 1800 After 1800, human numbers grew as the population explosion took hold. It carried our entire population to 6 billion in October 1

Development administration, Development Administration: Since the Gove...

Development Administration: Since the Government has been entrusted to manage economic and business activities, it was found difficult to manage the economic policy with the t

Change in the population of consumers, Change in the population of consumer...

Change in the population of consumers: Population changes may affect the demand for a commodity.Areas of high population may demand more of certain commodities than areas of low

Explain about counter-cyclical policies, Q. Explain about Counter-Cyclical ...

Q. Explain about Counter-Cyclical Policies? Counter-Cyclical Policies:Governments may take many different actions to offset ongoing booms and busts of private-sector economy. T

Elasticity, E-goods are returning to price levels which we thought they had...

E-goods are returning to price levels which we thought they had left behind, again the inevitable price elasticity. Why is it so certain that price elasticity will cause those pric

Rationale for government intervention, Rationale for government interventio...

Rationale for government intervention There are six major functions the government can perform in an economy. 1. The government provides a legal and social framework within which

Health and life expectancy, Health and Life Expectancy: In addition t...

Health and Life Expectancy: In addition to struggling on low income, many people in the developing nations fight a constant battle against malnutrition, disease and ill healt

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