nswer the following, providing a graphical illustration along with your answer where necessary: a) What is the profit maximising condition in a market with perfect competition? b) Explain what is meant by abnormal profit? What is the adjustment process from short-run abnormal profit to long-run equilibrium in a perfectly competitive market? c) Please find below Pricing options for firm A and B, along with individual payoffs (Firm A’s payoff/Firm B’s payoff) Firm B Firm A Price £2 Price £1 Price £2 £20,000/£20,000 £10,000/£24,000 Price £1 £24,000/£10,000 £12,000/£12,000 Assume you are the pricing manager at Firm A; i) What is your payoff for a ‘maximin’ strategy? ii) What is your payoff for a ‘maximax’ strategy? iii) Does a dominant strategy exist within this prisoners’ dilemma?

Why can't a perfectly competitive firm charge a price premium (sell at a higher price) relative to other firms in the industry (what would happen if a firm attempted to do so)? What is the term given to perfectly competitive firms since they must sell at the market equilibrium price?

Assume the following regarding a firm in Perfect Competition: Market Demand = Qd 460-3P Market Supply = Qs = 9 P Each identical firm has: MC=4q ATC = 14 1. What price will the firm charge? Number 2. What is the firm's equilibrium quantity? Number 3. What is the firm's total cost? Number 4. What is the firm's total revenue? Number 5. What is the firm's profit or loss? (use a negative sign to indicate a loss) Number 6. Is the firm in a short-run or long-run situation? Click for List

Assume the following inverse market demand curve given by  p = a - bQ.Marginal cost of Firm 1 is m  and that for Firm 2 is m + x and x > 0.Calculate the equilibrium quantities and market price.

Please diagram the revenue and profit situation (which would also include the cost curves) for a producer of a highly elastic (but not perfectly elastic) good of your choice (a restaurant, boutique clothing store, etc.). Under what circumstances would it make sense for them to raise their price? While profit maximization is the main goal for most firms (and one which you should be able to represent on a diagram), you may wish to consider alternative goals depending upon the business you have chosen.

Consider the weekly market for gyros in a popular neighborhood close to campus. Suppose this market is operating in long-run competitive equilibrium with many gyro vendors in the neighborhood, each offering basically the same gyros. Due to the structure of the market, the vendors act as price takers and each individual vendor has no market power. The following graph displays the supply (S = MC) and demand (D) curves in the weekly market for gyros. Place the black point (plus symbol) on the graph to indicate the market price and quantity that will result from competition. PRICE (Dollars per gyro) 5.0 PRICE (Dollars per gyro) 4.5 4.0 3.5 1.0 0.5 5.0 4.5 4.0 0.5 0 0 10 20 0 10 30 Now assume that one of the gyro vendors successfully petitions the neighborhood development board to obtain exclusive rights to sell gyros in the neighborhood. This firm buys up all the rest of the gyro food trucks in the area and begins to operate as a monopoly. Assume that this change does not affect demand and…

QUESTION 6 Which of the following is a necessary condition for a firm to be able to bundle a new product with an existing one? consumers' willingness to pay for the two products are inversely related. the firm must operate in a perfectly competitive market. consumers must have a higher willingness to pay for the new product than for the older existing product. the two goods must be substitute products.

a) What is the profit maximising condition in a market with perfect competition?b) Explain what is meant by abnormal profit? What is the adjustment process from short-run abnormal profit to long-run equilibrium in a perfectly competitive market?c) Please find below Pricing options for firm A and B, along with individual payoffs (Firm A’s payoff/Firm B’s payoff)Firm BFirm APrice £2 Price £1Price £2 £20,000/£20,000 £10,000/£24,000Price £1 £24,000/£10,000 £12,000/£12,000Assume you are the pricing manager at Firm A;i) What is your payoff for a ‘maximin’ strategy?ii) What is your payoff for a ‘maximax’ strategy?iii) Does a dominant strategy exist within this prisoners’ dilemma?

DuopolyMarket for mechanical pencils can be described by the following demand schedule:Price | Number of pencils demanded$6 | 80$5 | 200$4 | 320$3 | 440$2 | 560$1 | 680$0 | 800The fixed cost is $340, while the variable cost is $0.50.a) For each price, find the total revenue, the total cost, and the profit.b) If the market was under perfect competition, what would be the price and the quantity ofpencils traded in the long run? Why?c) If there was only one seller on the market, what would be the price and the quantity ofpencils traded? Why?d) If there were two firms on the market and they agreed to cooperate, how much would eachfirm need to produce? Follow the procedure outlined in the lecture and show that the otherfirm would prefer to deviate from the agreement.e) When the firms deviate from the agreement, there is a new optimal level of output. Showwhether the firms have an incentive to deviate from that level?f) If there were two firms on the market, what would be the price and the…

Q4) Answer the following, providing a graphical illustration along with your answer where necessary: a) What is the profit maximising condition? b) Explain what is meant by abnormal profit? What is the adjustment process from short-run abnormal profit to long-run equilibrium in a perfectly competitive market? c) Please find below Pricing options for firm A and B, along with individual payoffs (Firm A's payoff/Firm B's payoff) Firm A Price £2 Price £1 Assume you are the pricing manager at Firm A; i) ii) Price £2 £10,000/£10,000 £12,000/£5,000 Firm B Price £1 £5,000/£12,000 £6,000/£6,000 What is your payoff for a 'maximin' strategy? What is your payoff for a 'maximax' strategy? Does a dominant strategy exist within this prisoners' dilemma?