Question 1
Why are cartel and collusion inherently unstable?
Your response should be at least 200 words in length.
Question 2
How is a monopolistically competitive industry like perfect competition? How is it like monopoly?
Your response should be at least 200 words in length.
Question 3
Describe monopolistically competitive and oligopoly markets and give examples of each.
Your response should be at least 200 words in length.
Question 4
When one automaker begins offering low cost financing or rebates, others tend to do the same. What two oligopoly models might offer an explanation of this behavior?
Your response should be at least 200 words in length.
Question 5
Why do oligopolists rely on a price leader to raise the market price of a product?
Your response should be at least 200 words in length.
Question 6
Industry demand is given by:
QD = 1000 – P
All firms in the industry have identical and constant marginal and average costs of $50 per unit.
If the industry is perfectly competitive, what will industry output be? What will be the equilibrium price? What profit will each firm earn?
Now, suppose that there are five firms in the industry and they collude to set the price. What price will they set? What will be the output of each firm? What will be the profit of each firm?
Your response should be at least 75 words in length.
Question 7
Two local manufacturing firms have a combined demand total cost functions given by:
Q = 105-P
If they cannot successfully collude and instead produce where market price equals marginal cost, what would be their total output? What would each firms profit be?
Your response should be at least 75 words in length.
Question 8
A firm has the following short-run inverse demand and cost functions for a particular product:
P = 45-0.2Q
TC = 500+5Q
At what price should the firm sell its product?
If this is a monopolistically competitive firm, what do you think would happen as the firm moves towards the long run? Explain.
Your response should be at least 75 words in length.
