Market structure assignment, business and finance homework help

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Ctrl AL EC111-05, 07. Microeconomics, Fall 2016. Exam 12 Part 2, Market Structure, due November 14, 16 or 18 Each question is worth 5 points. Please answer 10-15 points, as needed, to complete the total of 25 for Exam 2. Extra questions may be done for home-work credit Q1. Compare Monopoly with Perfect Competition in terms of Prices, Quantities, the number of businesses and jobs and the level of profits. How does this comparison affect public policy, and why do we still have tendencies towards monopoly? Q2. What does Game Theory tell us about the behavior of firms in an Oligopoly? Given that collusion is illegal, how can oligopolies still form a tacit monopoly? Q3. Give an example to illustrate aspects of Non-Price competition in a monopolistically competitive market structure. Q4. Explain how the regulation of a Natural Monopoly can be a situation with no good choices, including the problem of moral hazard,' as well as the option of deregulation Q5. What are some of the arguments in favor of monopoly and against perfect competition? Q6. Perfect competition is described as a market structure with many firms (roughly equal in size) having small market shares with no market power, being price takers (facing a horizontal demand) in a market with identical products and full availability of information. Explain how the first condition (many firms) can be the essential factor that accounts for all the others. Q7. Set up a pay-off matrix with two players, each with two options. Describe how each player may choose their action, based on their attitude towards risk-taking and availability of information on the expected behavior of the opponent. EC111-05, 07 Microeconomics, Fall 2016. Exam #3: Market Failure and International Economics, Take-home, due by final exam period. Please answer Q1 or Q2 for 15 points and one more for 10 points. Extra questions may be answered for assignment credit. QI. How does the difference between private and social values explain market failure even with perfect competition and market equilibrium, in the case of public goods and externalities? Allow public goods to be just like private goods in terms of exclusion and rivalry. Q2. Use the following outline to analyze an example of deregulation: Market solution, market failure, government intervention (regulation), government failure, deregulation (back to market solution). Each of these terms should be explained in the context of your example. Q3. Who gains and who loses from government support of agriculture in the U.S.? Why does it continue? Q4. Use the numerical example given on page 667 of the text to explain how comparative advantage can lead to gains from trade. How can the numbers be changed to prove that absolute advantage does not lead to gains from specialization and exchange? Q5. How does globalization explain patterns of changes in economic sectors in the U.S.A.? How does technology and immigration contribute to the process? Q6. Who gains and who loses from tariffs and/or quotas? Under what circumstances might protection have no impact?
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Explanation & Answer

Attached.

1. Compare monopoly with perfect competition in terms of
i.

Prices

In perfect competition, firms will take market price, while in the monopolies firms will set the price
ii.

Quantities

In perfect competition, there are many producers and many consumers, firms are able to produce as
much product as possible. In monopoly environment, the firm will produce up to the point of maximum
profit.
iii.

Number of businesses

In perfect competition, there are many businesses; there are many sellers and many buyers, while in the
monopoly environment there is only one seller with many buyers.
iv.

Level of profits

In the monopoly environment, firms are in a position to make abnormal profits since they are the price
setters, they can produce less to increase the level price. In a perfect competition firms can only make
normal profits since the market has many sellers and there is perfect information.
The differences between monopoly and perfect information is huge, public policy regulates the
monopoly power. Monopoly is used by the government in special industries so as to regulate the quality
of goods and services offered.
2. Game theory in oligopoly
Game theory illustrates how firms will make decisions bearing in mind that there are other firms in the
market which are also making the decision and their decision can affect our outcome. In oligopoly
market, there are a number of firms, in case one firm decides to increase its prices, it has to have in
mind the likely response of the other firms in the market.
Firms in oligopoly can use Price leadership where collision is illegal, this is where the leader firm will set
the price and the other firms will follow. It is unwritten without s...


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