Which of the following are NOT characteristics of a competitive market? *         a)Buyers and sellers have complete information.       b)There is freedom of entry and exit.       c)There are zero transaction costs.       d)There are only one or two sellers.

Economics 1) How many buyers are there in a perfectly competitive market?A) FewB) TwoC) ManyD) One2) A market in which there are many buyers and sellers, every firm sells the same standardized product, buyers and sellers have full information about the product and its price, and it is easy for firms to enter and exit the market is known as _____ market.A) monopolyB) oligopolyC) duopolyD) a perfectly competitive3) Which of the following is NOT a reason that firms in a perfectly competitive market are price takers?A) There are many firms that a buyer can choose from.B) Each firm can sell more of its goods at a lower price than at the market price.C) Each buyer has perfect information about all alternatives.D) Each firm's good is a perfect substitute for another firm's good.

The MC for the Hydration Power Drink is $1.00. The MC for the smoothie is $4.00.Using the chart and the information provided, what is the contribution margin at each price for each product? Hydration High Price contribution margin is Hydration Low Price contribution margin is Smoothie High Price contribution margin is Smoothie Low Price contribution margin is

Two firms are engaged in Bertrand competition. There are 10,000 people in the population, each of whom is willing to pay at most 10 for at most one unit of the good. Both firms have a constant marginal cost of 5. Each firm is allocated half the market. It costs a customer s to switch from one firm to the other. Customers know what prices are being charged. Law or custom restricts the firms to charging whole-dollar amounts (e.g., they can charge 6, but not 6.50). a. Suppose that s = 0. What are the Nash equilibria of this model? Why does discrete (whole-dollar) pricing result in more equilibria than continuous pricing? b. Suppose that s = 2. What is (are) the Nash equilibrium (equilibria) of this model? c. Suppose that s = 4. What is (are) the Nash equilibrium (equilibria) of this model? d. Comparing the expected profits in (b) to those in (c), what is the value of raising customers’ switching costs from 2 to 4?.

Use the graph below to answer the questions. Price $7 $6 $4 $2.50 Loss MC ATC MR₁ MR₂ 100 125 140 Firm's quantity (q) Suppose a firm in a competitive market faces a market price of $6. If the firm produces a level of output to maximize profit, how much profit does the firm earn? ✪ $ 840 If the market price drops to $4, the firm starts losing money. How much money does it lose? $ 280

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10. Competitive Supermarkets A small town is served by many competing supermarkets, which all have the same constant marginal cost. Use the black point (plus symbol) to show the competitive price and quantity in this market. Then use the green area (triangle symbol) to shade the area representing consumer surplus in the market for groceries, and use the purple area (diamond symbol) to shade the area representing producer surplus. Price, Cost, Revenue Demand Competitive Market Quantity of Groceries Competitive Outcome Consumer Surplus Marginal Co Producer Surplus Now suppose that the independent supermarkets combine into one chain. Use the black point (plus symbol) to show the profit-maximizing monopoly outcome. Then use the green area (triangle symbol) to shade the area representing consumer surplus in the market for groceries, and use the purple area (diamond symbol) to shade the area representing producer surplus. Finally, use the black area (plus symbol) to shade the area…

e. Please describe the effect on quantity and price when firms have an incentive to exit the market. (Hint: the number does not matter; just clarify how quantity and price change.) Price 12 10 8 6 4 2 ○ 20 20 40 60 MC ATC 80 AVC Demand curve 100 Quantity (beach balls per day)

Which market structure gives more consumer surplus, Cournot (simultaneous) orStackelberg (sequential)? Explain your answer.

Advertising could lead to lower prices a. if the advertising focusses on making demand as inelastic as possible b. if economies of scale achieved from more output exceed the advertising cost. c. if the advertising shifts the demand curve to the left. d. if the advertising intensity is low. e. under no circumstances, since the advertising costs money.