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

Work plan and gantt chart, Once the organization has decided to move forwar...

Once the organization has decided to move forward with the development of a new or modified system, it is time to determine what tasks are necessary to move the project from initia

Determine the rule of divergence in general, Determine The Rule of Divergen...

Determine The Rule of Divergence in General Though even if attention is confined to non-communist-ruled economies there still has been huge divergence in relative output per w

Indifference curve, explain the properties of indifference curve with the h...

explain the properties of indifference curve with the help of diagrams?

The demand for big mac, illustration for demand of big macs using indiffere...

illustration for demand of big macs using indifference curve and budget line

What is economic theory, What is Economic Theory? An economic theory th...

What is Economic Theory? An economic theory that can be considered an axiomatic approach comprise a set of assumptions and circumstances, an analytical framework and explanatio

Graph the total benefits and total costs functions, This problem continues ...

This problem continues the analysis from question 2. a.Another economic study finds that the marginal cost (MC) to farmers of nutrient runoff abatement is MC = .1Q. Graph this f

Detergent Cartel problem, 2) Proctor & Gamble (P&G) and the Lever Co. decid...

2) Proctor & Gamble (P&G) and the Lever Co. decide to form a laundry detergent cartel for future sales in Europe. Lever is more efficient than P&G. a)illustrate graphically how the

Project, Explain welfare grants and subsidies

Explain welfare grants and subsidies

Structure of national income, STRUCTURE OF NATIONAL INCOME: The struct...

STRUCTURE OF NATIONAL INCOME: The structure or composition of national income of an economy explains the relative significance of the different producing sectors in an economy

Define the term entrepreneurship, Define the term Entrepreneurship Ent...

Define the term Entrepreneurship Entrepreneurship :   An entrepreneur is an individual who takes risks and organises the factors of production to make a product and therefore

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