Your Deadline:
May 8, 07:00 PM
Pages/Words:
2 pages / 1100 words (Single spacing)
Citation Style:
Not Applicable
Assignment Type:
Short Answer Questions
Service:
Writing
Pages/Words:
2 pages / 1100 words (Single spacing)
Education Level:
University
Language:
English (US)
Your Deadline:
May 8, 07:00 PM
Assignment Topic:
Econ assignment
Subject:
Economics
Sources:
–
Citation Style:
Not Applicable
Description
Please type your answers with font 11th, times new roman, single-space, default margins. Make sure you show all the steps of your calculations when asked for calculations. Homeworks with a Turnitin plagiarism report yellow, orange and red are subject to penalties. Yellow reports receive a 25% penalty, orange/brown receive 50% penalty and red receive a 90% penalty. To avoid issueswith Turnitin please do NOT paste the questions into your answer sheet. Please keep also in mind that it is ok that you work together and discuss answers BUT each student must submit their own original answers and NOT re-write answers from someone else. Question 1 (15 points): You have a max of 2 pages and 1/2 to answer all the questions. You may draw your graphs by hand. In some highly concentrated industries, a single (“dominant”) firm serves a majority of the market and a group of smaller (“fringe”) firms supply the rest. a) (5 points) Explain what is the difference between a monopoly and a dominant firm. b) (10 points) Assume that total market demand for the oil market is given by: QD = 200 – 2P. Assume further that the non-OPEC oil producers act as a competitive fringe with a supply given by QS = ½P -12.5. The dominant firm marginal cost is given by MC = 10 + ½Q. Use the dominant firm model discussed in the recorded lecture to answer the following questions. What is the minimum price needed for the competitive fringe to supply positive units of Output? At what price does the competitive fringe supply output to the entire market? Derive the dominant firms residual demand function. Show all the steps. Derive the dominant firm’s marginal revenue function. Show all the steps. Show that the equilibrium price set by the dominant firm is P =$61.92 and the total market demand is Q = 76.16. At the equilibrium price set by the dominant firm, how much will the competitive fringe supply to the market? Show it is Q = 18.46. At the equilibrium price set by the dominant firm, how much will the dominant firm supply to the market? Explain. Show the above answers graphically. The competitive fringe reduces the market power of the dominant firm. If the dominant firm wanted to try and eliminate the competitive fringe, how might the dominant accomplish this? Explain. If the dominant firm eliminates the competitive fringe, explain how this will the market and the consumers.Explain. Question 2 (20 points): Please fully explain your answer and clearly state if the statements are true or false. Points are awarded based on explanations. 1.(4 points) In a two-player game, a Nash equilibrium is the outcome that maximizes the sum of the players’ payoffs. (you have one paragraph) 2.(4 points) In a Nash equilibrium in a two-player game, both players must have selected a dominant strategy. (you have one paragraph) 3.(4 points) Repeatedly playing the Prisoner’s Dilemma may or may not result in a cooperative solution. (you have one paragraph) 4.(4 points) In the models of oligopoly considered in the recorded lectures, the equilibrium price will be strictly lower if there are n + 1 firms than if there are n firms. (you have one paragraph) 5.(4 points) In the models of oligopoly considered in the recorded lectures, consumers are no better off than in a perfectly competitive market. (you have one paragraph)
