In recent years in the brewing industry, a couple of large firms that have historically had most of the beer sales (Anheuser-Busch and Miller) have faced competition from many small “micro” brands. In terms of the continuum of competition, how would you explain this change?

Identify an industry that enjoys perfect (or nearly perfect) competition. How do the competitors interact with each other and suppliers and customers?

How would the introduction of legal or technical barrier to entry affect the long-run equilibrium in a market that was perfectly competitive before the introduction of the new barriers to entry?

The size of a firm is more important than market share in determining market power for an industry or product. A. True B. False

Question 4 Many companies reward their managers based on profits so that the managers will make decisions to maximize profits. However, some companies are paying their managers based on sales or revenue, instead of profits, so their managers will make decisions to maximize revenue. For example, at Reebok, the former CEO Paul Fireman received a nickel for every pair of shoes sold. a. Suppose that there are two existing firms in the market competing in quantity. Ignore market uncertainty and long-run competition. Firm B's manager is always paid based on firm B's profits. Firm A has been paying its manager based on profits but now changes to pay the manager solely based on revenue. Each manager chooses the production level (quantity) for his firm simultaneously. Is it possible for the above change in firm A's compensation system to increase firm A's profits? What are the direct effects and strategic effects on firm A's profit? Explain. Direct Effect (Circle one): Positive Negative…

Many economists would argue that there is no such thing as perfect competition in the real world. What limitations to that theory would support their argument?

In this week’s discussion we focus on market competition and the power of firms to set prices. (a) Along with your textbook reading, review the videos, blog, and articles on market competition. Then respond to the following questions: If all the firms in an industry are charging the same price, is it fair to say that they are engaged in price collusion? To what extent might this be a plausible explanation? Are there any other possible explanations? What type of market structure do you think is more conducive to firms engaging in price-fixing? Why do you think the price-fixing situation in the case described went on for so long? (one paragraph) Click the link to review a recent price-fixing case on bread. (b) In your town or city try to find a local business that appears to enjoy some degree of monopoly power (it does not have to be a pure monopoly: one unique product and one seller). Briefly describe the nature of this business and explain some of the factors that give it monopoly…

Assume that private schools form a competitive industry. Suppose the demand for private schools rises because the government initiates a new program to offer income tax rebates to parents with children in private schools. In the short run, what happens to the number of students in private schools? What happens to the profits of each school? Answer by making two clearly labeled graphs (industry and firm-level) with clear explanations.

IATA (the International Air Transport Association) is an example of : Select one: a. Price leadership model. b. Perfectly competitive firms. c. An oligopoly. d. Monopoly.

Pick an industry where there is a dominant firm. Assume that you are the CEO of that firm. What specific measures would you take to deter entry, if any?