Thomas Edison State ECO 112 Week 8 Assignment
1. In your text (refer to Chapter 17, Figure 4) you see a Prisoner’s Dilemma game that asks "Should we drill another well or not?" Consider this game and describe what the dominant strategy is (as per your text). Consider what will happen if this becomes a repetitive game (both oil companies knowing they will share many oil fields over the next years). Will the dominant strategy survive, and—if not—what strategy could emerge as "best"?
2. In what ways can a government create a monopoly? Why might a government do this?
3. Define and explain the relationship between total revenue, average revenue, and marginal revenue for a monopolist. What is monopoly profit?
Total Revenue _______
Average Revenue ___________________________
Marginal Revenue is _________________________________________
Monopoly Profit ____________________________
Should a monopolist produce quantities of product greater than that which would maximize profits?
4. Explain the output effect and the price effect for an oligopoly. How does each influence the oligopolist's production decision?
5. Entry of firms in a monopolistically competitive industry is characterized by two "external" effects. What are these effects and how do they affect a monopolistically competitive firm. How are consumers and incumbent firms influenced by these externalities?
6. Brand names can be important to the success of a firm in some industries. Consider industries that demonstrate monopoly, monopolistic competition, oligopoly, and perfect competition. What is the goal of creating a brand name for each of these market structures? What does the brand name do to the demand curve for the product? What is the role of advertising in each of the four market structures.
1. In your text (refer to Chapter 17, Figure 4) you see a Prisoner’s Dilemma game that asks "Should we drill another well or not?" Consider this game and describe what the dominant strategy is (as per your text). Consider what will happen if this becomes a repetitive game (both oil companies knowing they will share many oil fields over the next years). Will the dominant strategy survive, and—if not—what strategy could emerge as "best"?
2. In what ways can a government create a monopoly? Why might a government do this?
3. Define and explain the relationship between total revenue, average revenue, and marginal revenue for a monopolist. What is monopoly profit?
Total Revenue _______
Average Revenue ___________________________
Marginal Revenue is _________________________________________
Monopoly Profit ____________________________
Should a monopolist produce quantities of product greater than that which would maximize profits?
4. Explain the output effect and the price effect for an oligopoly. How does each influence the oligopolist's production decision?
5. Entry of firms in a monopolistically competitive industry is characterized by two "external" effects. What are these effects and how do they affect a monopolistically competitive firm. How are consumers and incumbent firms influenced by these externalities?
6. Brand names can be important to the success of a firm in some industries. Consider industries that demonstrate monopoly, monopolistic competition, oligopoly, and perfect competition. What is the goal of creating a brand name for each of these market structures? What does the brand name do to the demand curve for the product? What is the role of advertising in each of the four market structures.
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