Homework Answers
C. Demand curve facing the firms when the cartel is formed- this is because both the demand curves are meeting at point where the prices are 50 hence this is the equilibrium price where the firms have decided to sell their product. As per their will they can surely chenge the price but the consequences will make them follow the usual price trend.
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Exhibit 10-4 Kinked demand curves 50 Price (dollars) Quantity In Exhibit 10-4, in a kinked-demand oligopoly...
The kinked-demand curve for oligopolists assumes that rivals will
a. The kinked-demand curve for oligopolists assumes that rivals will match price cuts and price increases. match price increases, but ignore price cuts. match price cuts, but ignore price increases. neither match price cuts nor price increases. b. There is a gap in the oligopolist's marginal-revenue curve because price drops abruptly. the cost of production changes abruptly. the slope of the demand curve changes abruptly. price rises abruptly. c. The kinked-demand curve explains price rigidity in oligopoly because firms expect any change in price will lower revenue and profits. firms agree to...
9. Understanding the kinked demand curve theory Aa A Happyland is one of five amusement parks...
9. Understanding the kinked demand curve theory Aa A Happyland is one of five amusement parks on Sunshine Island. The following graph shows Happyland's kinked demand curve (DID2) and the resulting marginal revenue curve (MRIMR2). The graph also shows two possible marginal cost curves (MC1 and MC2) PRICE AND COSTS (Dollars per ticket 48 D1 40 MRT 32 MCI 16 : MC2 MR2 0412 16 20 4 QUANTITY IMittions of tickets per yearl Assume Happyland's marginal cost is represented by...
47) Firms in an oligopoly i. are independent of each other's actions. ii. can each influence...
47) Firms in an oligopoly i. are independent of each other's actions. ii. can each influence the market price. ii. charge a price equal to marginal revenue. A) 1 only B) ii only C) ii only D) i and ii E) i, ii, and ii 48) Which of the following are characteristics of an oligopoly? i) The HHI for an oligopoly is between 100 and 1800. i) There are a few firms that compete. ii) The firms can increase their...
4. A kinked demand curve can explain rigidity of oligopolists' administered price. What does inflexible, administered...
4. A kinked demand curve can explain rigidity of oligopolists' administered price. What does inflexible, administered pricing mean? a. b. Why would an oligopolist have little motivation to change its price frequently? In the diagram below, assume that the equilibrium price is at point G. Is this over costs? Is the oligopolist earning economic profit? Explain C. d. At G there is a kink in the effective demand and marginal revenue curves of the oligopolist. Why? i. If it cuts...
Question7 0.1 pts A kinked demand curve O is used to show why oligopolists frequently change...
Question7 0.1 pts A kinked demand curve O is used to show why oligopolists frequently change prices. explains how certain prices arise in an oligopoly market O shows that firms in oligopolistic markets are not interdependent. O illustrates why oligopolists may be reluctant to change their pricing strategy. O is used to show why oligopolists must collude to set prices. Question 8 0.1 pts Which of the following is true regarding a kinked demand curve? O Firms worry about their...
The kinked demand curve explains the observation that in oligopoly markets Multiple Choice Rivals match price...
The kinked demand curve explains the observation that in oligopoly markets Multiple Choice Rivals match price increases. 0 Prices may not change even in the face of cost increases. 0 Practice product differentiation 0 C) Rivals do not match price reductions 0 O Some companies co not play by the rules
Chapter 14 Vocabulary Name: a. Kinked demand curve b. Cartel c. Price leadership d. Game theory...
Chapter 14 Vocabulary Name: a. Kinked demand curve b. Cartel c. Price leadership d. Game theory e. Collusion f. Strategic behavior g. Homogeneous oligopoly h. Price war i. Differentiated oligopoly j. Oligopoly ( ) Five or fewer firms produce most of the output in an industry, or control a large share of the market. ( ) Many consumer goods, like automobiles and sporting goods, are produced by a few firms. ( ) This is when firm’s break from pricing decision...
(6) Kinked Demand. Brooklyn Broadband, Inc., is a local provider of broadband access to the Internet...
(6) Kinked Demand. Brooklyn Broadband, Inc., is a local provider of broadband access to the Internet in Brooklyn, New York. Brooklyn faces the following segmented demand and marginal revenue curves for its residential service: Over the range of 0 to 50(000) customers per month P1 = $15 . $0.05Q When output exceeds 50(000) customers per month P2 $22.50-$0.2Q The company's total and marginal cost functions are as follows TC $7.50+$1.50Q $0.025Q where P is price (in dollars), Q is output...
Exhibit 3-16 Supply and demand curves for chairs 20.00 Price 15.00 per chair (dollars 10.00 5.00...
Exhibit 3-16 Supply and demand curves for chairs 20.00 Price 15.00 per chair (dollars 10.00 5.00 D 5 0 1 2 3 4 Quantity of chairs (thousands per week) In Exhibit 3-16, assume that the market price of chairs is $15 each. This price is an equilibrium price. not an equilibrium price, since there is an excess demand at a price of $10 an equilibrium price, since suppliers can store inventories in their warehouses not an equilibrium price, since the...
Question 2 Exhibit 4-5 Price (dollars) P. 0 QI Quantity Kidneys for Transplants Refer to Exhibit...
Question 2 Exhibit 4-5 Price (dollars) P. 0 QI Quantity Kidneys for Transplants Refer to Exhibit 4-5. If a free market were allowed in the transplanted kidney market, then the equilibrium price would be Pg. The number of kidneys transplanted would increase by compared to the number transplanted at a price ceiling of P-50. Q-01) O (Q2-01) Question 3 Exhibit 3-10 30 20 Price of X (dollars) 10 100 300 Quantity of Refer to Exhibit 3-10, $20 is the price...
a. The kinked-demand curve for oligopolists assumes that rivals will match price cuts and price increases. match price increases, but ignore price cuts. match price cuts, but ignore price increases. neither match price cuts nor price increases. b. There is a gap in the oligopolist's marginal-revenue curve because price drops abruptly. the cost of production changes abruptly. the slope of the demand curve changes abruptly. price rises abruptly. c. The kinked-demand curve explains price rigidity in oligopoly because firms expect any change in price will lower revenue and profits. firms agree to...
9. Understanding the kinked demand curve theory Aa A Happyland is one of five amusement parks on Sunshine Island. The following graph shows Happyland's kinked demand curve (DID2) and the resulting marginal revenue curve (MRIMR2). The graph also shows two possible marginal cost curves (MC1 and MC2) PRICE AND COSTS (Dollars per ticket 48 D1 40 MRT 32 MCI 16 : MC2 MR2 0412 16 20 4 QUANTITY IMittions of tickets per yearl Assume Happyland's marginal cost is represented by...
47) Firms in an oligopoly i. are independent of each other's actions. ii. can each influence the market price. ii. charge a price equal to marginal revenue. A) 1 only B) ii only C) ii only D) i and ii E) i, ii, and ii 48) Which of the following are characteristics of an oligopoly? i) The HHI for an oligopoly is between 100 and 1800. i) There are a few firms that compete. ii) The firms can increase their...
4. A kinked demand curve can explain rigidity of oligopolists' administered price. What does inflexible, administered pricing mean? a. b. Why would an oligopolist have little motivation to change its price frequently? In the diagram below, assume that the equilibrium price is at point G. Is this over costs? Is the oligopolist earning economic profit? Explain C. d. At G there is a kink in the effective demand and marginal revenue curves of the oligopolist. Why? i. If it cuts...
Question7 0.1 pts A kinked demand curve O is used to show why oligopolists frequently change prices. explains how certain prices arise in an oligopoly market O shows that firms in oligopolistic markets are not interdependent. O illustrates why oligopolists may be reluctant to change their pricing strategy. O is used to show why oligopolists must collude to set prices. Question 8 0.1 pts Which of the following is true regarding a kinked demand curve? O Firms worry about their...
The kinked demand curve explains the observation that in oligopoly markets Multiple Choice Rivals match price increases. 0 Prices may not change even in the face of cost increases. 0 Practice product differentiation 0 C) Rivals do not match price reductions 0 O Some companies co not play by the rules
(6) Kinked Demand. Brooklyn Broadband, Inc., is a local provider of broadband access to the Internet in Brooklyn, New York. Brooklyn faces the following segmented demand and marginal revenue curves for its residential service: Over the range of 0 to 50(000) customers per month P1 = $15 . $0.05Q When output exceeds 50(000) customers per month P2 $22.50-$0.2Q The company's total and marginal cost functions are as follows TC $7.50+$1.50Q $0.025Q where P is price (in dollars), Q is output...
Exhibit 3-16 Supply and demand curves for chairs 20.00 Price 15.00 per chair (dollars 10.00 5.00 D 5 0 1 2 3 4 Quantity of chairs (thousands per week) In Exhibit 3-16, assume that the market price of chairs is $15 each. This price is an equilibrium price. not an equilibrium price, since there is an excess demand at a price of $10 an equilibrium price, since suppliers can store inventories in their warehouses not an equilibrium price, since the...
Question 2 Exhibit 4-5 Price (dollars) P. 0 QI Quantity Kidneys for Transplants Refer to Exhibit 4-5. If a free market were allowed in the transplanted kidney market, then the equilibrium price would be Pg. The number of kidneys transplanted would increase by compared to the number transplanted at a price ceiling of P-50. Q-01) O (Q2-01) Question 3 Exhibit 3-10 30 20 Price of X (dollars) 10 100 300 Quantity of Refer to Exhibit 3-10, $20 is the price...
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