Exam 12: Imperfect Competition

In the monopolistic competition model

Suppose there are two firms,Boors and Cudweiser,each selling nonalcoholic beer.Suppose Boors and Cudweiser are not viewed as perfect substitutes but rather demand for Boors is QB = 5000 - 1000PB + 100PC and demand for Cudweiser is QC = 3000 - 1500PC + 100PB.For simplicity,assume zero marginal costs.Which is the more preferred beer?

Relative to the case in which two identical firms choose quantities simultaneously in a Cournot model,if one of the two moves first and is observed by the other,how would this affect its output?

Two firms engage in Bertrand competition in differentiated products. After doing all the appropriate calculations,you find the best-response functions are PB = 2.5 + .15PC and PC = 1.5 + .075PB. Without doing any further calculations,can you determine the relationship between their Nash equilibrium prices?

Suppose there are two firms,Boors and Cudweiser,each selling identical-tasting nonalcoholic beer.Consumers of this beer have no brand loyalty so market demand can be expressed as P = 5 - .001(QB + QC). Boors' marginal revenue function can be written MR = 5 - .001(2QB + QC)and symmetrically for Cudweiser. Boors operates with out-of-date technology and has constant cost of $2 per unit $( M C = A C = 2 )$ whereas Cudweiser has constant cost of $1 per unit. Assuming the firms behave as Cournot competitors,Boor's best-response function is

Consider the same market for nonalcoholic beer as in the previous question. How many "units" of beer will Boors produce in the Nash equilibrium?

In the long run,in the model of monopolistic competition,for a typical firm,price is

Which alteration of the assumptions behind the Bertrand model can help avoid the Bertrand Paradox (that an outcome resembling perfect competition may arise with even as few as two firms)?

Which factor would facilitate tacit collusion among firms in a market?

Consider the market for nonalcoholic beers from the previous question. Boors' price in a Nash equilibrium (assuming Bertrand competition in these differentiated beers)is about

Product differentiation complicates the study of oligopolies because such markets may not

In a Cournot equilibrium,each firm chooses an output level that

Consider the same market for nonalcoholic beer as in the previous question. How many units will Boors produce in the Nash equilibrium?

A profit-maximizing firm should spend an additional dollar on advertising so long as this expenditure results in more than one dollar of

In the Cournot model,each firm assumes that its rival will ____ its output when the firm adjusts its own output.Which word best completes the sentence?

Consider the market for nonalcoholic beers from the previous question.Which of the following is the best-response function for Boors from the Bertrand game?

All of the following are problems associated with maintaining a cartel except

Consider the same market for nonalcoholic beer as in the previous question. How many "units" of beer will Cudweiser produce?

Suppose there are two firms,Boors and Cudweiser,each selling identical-tasting nonalcoholic beer.Consumers of this beer have no brand loyalty so market demand can be expressed as $P = 5 - .001 \left( Q _ { B } + Q _ { C } \right)$ .Boors' marginal revenue function can be written $M R = 5 - .001 \left( 2 Q _ { B } + Q _ { C } \right)$ and symmetrically for Cudweiser. Boors operates with out-of-date technology and has constant cost of $4 per unit $( M C = A C = 4 )$ whereas Cudweiser has constant cost of $2 per unit. Assuming thefirmsbehave as Cournot competitors,in the Nash equilibrium,Cudweiser will produce

In the price-leadership model,