QUESTION 57 In general, horizontal mergers will O increase the number of firms in an industry. O increase competition in an industry. O reduce economic profits in an industry. O decrease the number of firms in an industry.
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- What is the market situation exist when there are many buyers and many sellers? O Monopoly Recession O None of the choices Oligopoly O Perfect competition *dr. phelps (Edmund Phelps) claims the US is becoming more corporatist -- which of the four models (pure competition, monopolistic competition, oligopoly, or monopoly) may be the most useful for analyzing the microeconomic behavior of firms in today's economy? discuss whethere you belibe Phelps is correcg in concluding that our current social-political-economic system does not facilitate nor stimulate our economy's dynamism as much as it did in the past. response should be at least 5 sentences per each part of the question. so a total of 10 sentences or more.Table 17-4 Only two firms, ABC and XYZ, sell a particular product. The following table shows the demand curve for their product. Each firm has the same constant marginal cost of $8 and zero fixed cost. O a. $5 O b. $15 Price (Dollars per unit) O c. $20 O d. $10 28 26 24 22 20 18 16 14 12 10 8 6 4 2 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 Refer to Table 17-4. How much less do each of these firms earn in the Nash equilibrium than if they jointly maximize profits? Quantity Demanded (Units) Total Revenue (Dollars) 0 130 240 330 400 450 480 490 480 450 400 330 240 130 0
- Perfect competition is great for consumers, but not for producers. Present a perfect competition equilibriumusing the average cost and marginal cost curve framework used in class, and explain using words why thisequilibrium is good for consumers but not for firms. Then, assume the firm innovates in a way that gives thefirm market power and provides the firm with an economic profit. In a second diagram, show the situationfor this firm after the innovation. Use your results to explain using words why free market capitalism tendsto provide an improving living standard for consumers over time.Only typed answer 1. Why do oligopolies exist? A. A small number of firms have established barriers to entry using economies of scale, patents, and sheer size to prevent other firms from challenging them. B. The oligopolistic firms are created, run, and supported by the government. C. The members of an oligopolistic market are producing in the upward sloping range of their long run average cost curves.Intellectual property laws are intended to promote innovation, but some economists, such as Milton Friedman, have argued that such laws are not desirable. In the United States, there is no intellectual property protection for food recipes or for fashion designs. Considering the state of these two industries, and hearing in mind the discussion of the inefficiency of monopolies, can you think of any reasons why intellectual property laws might hinder innovation in some cases?
- May and Raj me the only two growers who provide organically grown corn to a local grocery store. They know that if they cooperated and produced less corn, they could raise the price of the com. If they work independently, they will each earn 100. If they decide to work together and both lower their output, they call each earn 150. If one person lowers output and the other does not, the person who lowers output will earn $1 and the other person will capture the entire market and will earn 200. Table 10.6 represents the choices available to Mary and Raj. What is the best choice for Raj if he is sole that Mary will cooperate? If Mary thinks Raj will cheat, what should Mary do and why? What is the prisoners dilemma result? What is the preferred choice if they could ensure cooperation? A = Work independently; B = Cooperate and Lower Output. (Each results entry lists Rajs earnings first, and Marys earnings second.)What is the relationship between product differentiation and monopolistic competition?How is the perceived demand curve for a monopolistically competitive film different from the perceived demand curve for a monopoly or a perfectly competitive film?
- Return to Figure 9.2. Suppose P0 is 10 and P1 is 11. Suppose a new firm with the same LRAC curve as the incumbent tries to bleak into the market by selling 4,000 units of output. Estimate from the graph what the new firms average cost of producing output would be. If the incumbent continues. to produce 6,000 units, how much output would the two films supply to the market? Estimate what would happen to the market price as a result of the supply of both the incumbent firm and the new entrant. Approximately how much profit would each firm earn? Figure 9.2 Economics of Scale and Natural MonoployTable 16-1 The following table shows the output produced by each of the top eight firms in four industries as well as the total industry output for those industries. Firm Industry A Industry B Industry C İndustry D 1 50,000 18,000 37,000 36,500 35,500 40,000 2 47,000 17,750 39,000 3. 43,000 17,250 37,000 4 38,000 16,500 34,000 34,000 32,000 15,500 32,000 30,000 25,000 14,250 29,500 25,000 17,000 12,750 26,500 19,000 12,000 8,000 11,000 23,000 Total 270,000 130,000 300,000 250,000 Refer to Table 16-1. Which industry has the highest concentration ratio? Oa. Industry A Ob. Industry D Oc. Industry B Od. Industry CQuestion 1 Which of the following is one way that market power can lead to innovation? O A) Firms are able to make increased economic profit which can be used for innovation. O B) There is more social pressure on firms with large market power to innovate. C) Increased market power means there is more competition, leading firms to compete more. D) Production is more expensive for firms with more market power than firms with less market power, leading them to look for new ways to produce. Question 2 6 Which of the following is NOT true about large firms? O A) Large firms have advantages in financial markets. B) Large firms cannot exploit economies of scale, so they must use innovation to reduce cost. C) Large firms have more resources to exploit an unexpected discovery. D) Large firms can spread the cost of research over a larger sales base.