Answered: 6. Answer if this statement is true,…

6. Answer if this statement is true, false, or uncertain, and explain. Cartels that form almost always last a long time and are successful. Falge. why? Haw?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

6. Answer if this statement is true, false, or uncertain, and explain. Cartels that form almost
always last a long time and are successful.
Falge.
whiy? How?
7. Answer if this statement is true, false, or uncertain. There is no diagram for a firm in
oligopoly because they do not have one stable demand curve.
True.
8. Answer if this statement is true, false, or uncertain, and explain. The marginal revenue for a
monopoly business firm selling one more unit is the same as the price that unit sells for. In
other words, if the monopoly firm goes from selling 2 umbrellas to 3 umbrellas, and the 3d
one sells for $4, the increase in total revenue will be $4.
Falge.
need to explain why is true or false ?

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4. Imagine a market with demand P = 420 – Q in each period. Two firms are thinking about colluding. They each have cost C(Qi) = 60Qi. If they cooperate and behave as a monopoly, then they have a marginal revenue curve, MRm = 420 – 2Q, and a marginal cost curve, MCm = 60. If they are in a cartel, then the firms will split the monopoly production and profits. If they compete, then they face MRi = 420 – 2Qi – Q-I and MCi = 60. a. If the firms stick to their agreement (cooperate), how much per-period profit do they each make? b. If they are not able to maintain their agreement (compete), what is their per-period profit? c. If one firm cheats on their agreement (deviate), how much does each firm make? Be sure to specify both the profit for the cheater and the firm cheated-on. d. Suppose the firms assume that their interaction will last forever (r = 1) and they share the common discount value R. What is the lowest value of R such that both firms are willing to continue with the cartel…
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When comparing two firms operating as a cartel/colluding and two firms competing in Cournot competition, given the firms face the same inverse market demand and marginal cost is the same for both firms in either situation, which of the following is true? а. The total profit is the same in Cournot competition and collusion. O b. Total output is higher in collusion than in Cournot competition and the price is lower in collusion than in Cournot Competition. Ос. The total profit is lower in Cournot competition than in collusion. O d. Total output is lower in collusion than in Cournot competition and the price is higher in collusion than in Cournot Competition.
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