Explain why the following statement is false. Consider an imperfect market with a few firms. By forming the best strategy to compete with each’s rivals, the firms in the market
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Explain why the following statement is false.
Consider an imperfect market with a few firms. By forming the best strategy to compete with each’s rivals, the firms in the market will get the best profit they can.
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- In a market there are five firms, all have a total cost curve equal to CT = 2q. The market demand is Q = 500 - 5P. How much profit would each firm get if they collude and share the market equitably? What is the profit to each firm if they agree to collude, but one firm misleads the others charging a slightly lower price? What is the profit if all firms do not collude and compete via price?Is collusion by a group of sellers or buyers possible in a market of pure and perfect competition? Explain your answer.The daily demand for bungee jumping over a river in South Africa is given by Q=5000-200P. There are two firms operating and the first one has a daily capacity of 600 people and the second one of 400 people. The marginal cost of operation is 5 for both firms. The two firms compete in prices and announce their prices simultaneously. Calculate the price and profits of both firms.
- Dell and Sony compete primarily by price. Each firm must choose either a high price or a low price simultaneously. Use the following information to create the profit matrix: If Dell and Sony both set high prices, Dell’s profit is $40 million and Sony’s profit is $35 million. If Dell sets high price and Sony sets low price, Dell’s profit is $25 million and Sony’s profit is $40 million. If Dell sets low price and Sony sets high price, Dell’s profit is $50 million and Sony’s profit is $10 million. If Dell and Sony set low prices, Dell has $20 million and Sony has $15 million. Please answer the following questions: Does Sony have a dominant strategy? Dell? If so, which one? If Dell and Sony maximize their profits non-cooperatively, what is the Nash-equilibrium for this profit matrix? Instead, if Dell and Sony maximize their joint profits cooperatively, what is the equilibrium? Assume they keep their agreements.Dell and Sony compete primarily by price. Each firm must choose either a high price or a low price simultaneously. Use the following information to create the profit matrix: If Dell and Sony both set high prices, Dell’s profit is $40 million and Sony’s profit is $35 million. If Dell sets high price and Sony sets low price, Dell’s profit is $25 million and Sony’s profit is $40 million. If Dell sets low price and Sony sets high price, Dell’s profit is $50 million and Sony’s profit is $10 million. If Dell and Sony set low prices, Dell has $20 million and Sony has $15 million. Please answer the follow questions: Does Sony have a dominant strategy? Dell? If so, which one? If Dell and Sony maximize their profits non-cooperatively, what is the Nash-equilibrium for this profit matrix? Instead, if Dell and Sony maximize their joint profits cooperatively, what is the equilibrium? Assume they keep their agreements.Economics Remove flag Anna, Bill, and Charles are competitors in a local market, and each is trying to decide whether it is worthwhile to advertise, If all of them advertise, each will earn a profit of $5000. If none of them advertise, each will earn a profit of $8000, If only one of them advertises, the one who advertises will earn a profit of $10,000 and the other two will each earn $2000. If two of them advertise, those two will each earn a profit of $6000 and the other one will earn $1000. If all three follow their dominant strategy, what will Anna do, and how much will she earn? Select one: a. Anna will advertise and earn $5000. b. Anna will advertise and earn $6000. C. Anna will not advertise and will earn $8000, d. Anna will advertise and earn $10,000.
- Evaluate the following: “Since a rival’s profit-maximizing price and output depend on its marginal cost and not its fixed costs, a firm cannot profitably lessen competition by implementing a strategy that raises its rival’s fixed costs.”Consider a market of 6 firms that compete through production. Demand is given as P = 220 – 2Q. Each firm has a marginal cost of $20. a. What will be the equilibrium firm quantities, market price, and firm profits? b. Suppose two firms merge in this market to become a leader. What will be the new equilibrium firm quantities, market price, and firm profits? Was it profitable for the firms to merge into a leader? Note that n = 5 after the merger. c. Suppose another two firms merge to form a second leader in the market. What will be the new equilibrium firm quantities, market price, and firm profits? Was it profitable for the followers to merge into a co-leader? Note that n = 4 and L = 2 after the merger:Assume that the competition between Boeing and Airbus can be characterized by the following matrix Airbus Produce Quit Boeing Produce 5/15 0/110 90/0 0/0 Quit where the first number in each cell denotes the payoff that Boeing receives and the second number is the payoff that Airbus receives. Then you would expect both Boeing and Airbus to produce Boeing to leave the market and Airbus to keep producing Airbus to leave the market and Boeing to keep producing that there will be no stable equilibrium
- These two cases provide examples of markets that are characterized neither as perfect competition nor monopoly. Instead, these firms are competing in market structures that lie between the extremes of monopoly and perfect competition. How do they behave? Why do they exist?HP and Sony compete primarily by price. Each firm must choose either a high price or a low price simultaneously. Use the following information to create the profit matrix: If HP and Lenovo both set high prices, HP’s profit is $40 million and Sony’s profit is $35 million. If HP sets high price and Sony sets low price, HP’s profit is $25 million and Sony’s profit is $40 million. If HP sets low price and Sony sets high price, HP’s profit is $50 million and Sony’s profit is $10 million. If HP and Sony set low prices, HP has $20 million and Sony has $15 million. Please answer the follow questions: Does Sony have a dominant strategy? HP? If so, which one? If HP and Sony maximize their profits non-cooperatively, what is the Nash-equilibrium for this profit matrix? Instead, if HP and Sony maximize their joint profits cooperatively, what is the equilibrium? Assume they keep their agreements.Explain in few lines Three firms are competing through prices (Bertrand competition). They are all selling the same products. The only difference is that the first two firms have a constant marginal cost equal to 2 while the third firm has a constant marginal cost equal to 5. In equilibrium the two firms with lower marginal cost will set their price just slightly below 5