Do you expect that an increase in the price of a product generates a larger decrease in quantity demanded for a monopolistically competitive firm than it would for a monopoly? a/ yes; consumers will buy from competitors offering lower priced substitutes b/  no; conditions of imperfect competition means demand is constant c/  no; a monopolistic competitor perceives demand as a price maker d/  yes; but temporarily because price increases only create a short-run decline

You are a duopolist producer of a homogeneous good. Both you and your competitor have zero marginal costs. The market demand curve is P=24-Q where Q=Q₁ +Q₂. Q₁ is your output and Q₂ is your competitor's output. Your competitor has also read this book. Total revenue (TR) for your firm will be and total revenue for your competitor's firm will be In turn, marginal revenue (MR) for your firm will be and marginal revenue for your competitor's firm will be TR₁ = (24-Q₁-Q₂)Q₁ minus TR₂ = (24-Q₁-Q₂) Q₂. MR₁ = 24-2Q₁-Q₂ MR₂ = 24-Q₁-2Q₂- Suppose you will play this game only once. If you and your competitor must announce your outputs at the same time, how much will you choose to produce? (Enter all numeric responses rounded to two decimal places.) You will produce units of output. What do you expect your profit to be? Explain. Profit will be $, from Suppose you are told that you must announce your output before your competitor does. How much will you produce in this case, and how much do you…

Albert and Johny are the only sellers of Motorbikes in Ireland. The inverse market demand function for motorbikes is P(Y)= 200- 2Y . Both firms have the same total cost function:  T(C)= 12Y and the same marginal cost: M(C)=12. Suppose now that the two firms decide to act like a single monopolist. What will the total quantity of Motorbikes sold in the market be and what will the equilibrium price be? Represent the profit maximisation problem on a graph and indicate the price and quantity at the equilibrium. Calculate the total profit made by the two firms when they act like a monopoly. Compare it with the total profit they were making in the Stackelberg oligopoly. For the two firms to be willing to agree to act as a monopoly, how should they split the quantity to produce between them? We assume that if they do not agree to act like a monopoly, then the market structure is the Stackelberg oligopoly studied above. We further assume that no money transfer is possible between the two…

The demand and total cost functions for a monopolistically competitive market are:   Q(P) = 300/N – P, where N = number of firms TC(Q) = 50 + Q2   There are currently three firms in this market and they are in a short run equilibrium.   c) In the long run, how many firms are in the market (round to the nearest integer)?

How do perfectly competitive firms, monopolists, monopolistically competitive firms, and cartels choose the profit -maximizing quantity? A) The quantity at which average total cost is minimizedB) The quantity at which total revenue and total cost are equalC) The quantity at which total revenue is maximizedD) The quantity at which marginal revenue and marginal cost are equal

(a) Firms A and B are Cournot duopolists producing a homogeneous good. The inverse market demand is given by P= 100 Q, where P is the market price and Q is the total quantity demanded. Each firm has marginal cost equal to 40 and there are no fixed costs. Calculate the total industry output in this market. Derive also (i) the market price, the total profit of the two firms and the consumer surplus. (ii) monopoly. Calculate the total industry output after the merger. Derive also the market price, profit and consumer surplus after the merger. Explain intuitively any changes in these variables if the merger occurs. Suppose the two firms propose to merge to become a

Some years ago, two intercity bus companies, Greyhound Lines, Inc. and Trailways Transportation System, wanted to merge. One possible definition of the market in this case was “the market for intercity bus service.” Another possible definition was “the market for intercity transportation, including personal cars, car rentals, passenger trains, and commuter air flights.” Which definition do you think the bus companies preferred, and why?

A simple profit-maximizing monopolist with a continuous linear demand curve has positive marginal costs at all levels of production above X = 0. Which one of the following statements is FALSE in the short run? Select one: a. At the chosen level of output, an increase in the price of the good will necessarily reduce total revenue b. At the chosen level of output, the monopolist is not maximizing total revenue C. At the chosen level of output, demand for the good is price elastic d. At the chosen level of output, economic profit is necessarily positive

You are considering entering a market serviced by a monopolist You are considering entering a market serviced by a monopolist. You currently earn $0 economic profits, while the monopolist earns $5. If you enter the market and the monopolist engages in a price war, you will lose $5 and the monopolist will earn $1. If the monopolist doesn’t engage in a price war, you will each earn profits of $2.There are two possible solutions or equilibria. What are they? You are considering entering a market serviced by a monopolist

Unique Creations holds a monopoly position in the production and sale of magnometers. The cost function facing Unique is estimated to be TC=$100,000+20QTC=$100,000+20�   What is the marginal cost (MC) for Unique?      If the price elasticity of demand for Unique is currently –1.5, what price should Unique charge?      What is the marginal revenue (MR) at the price computed?      If a competitor develops a substitute for the magnometer and the price elasticity increases to –2.25, what price should Unique charge?