Economics 3366A/B Study Guide - Quiz Guide: Perfect Competition, Oligopoly, Takers

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8 Oct 2020

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Monopoli on competiti competiti stic stic on) on) No t t products ous ated ous capacity. Consider or or able able relatively relatively low low. Set (each non-price non-price takers, prices and output firm competiti competiti compete change undercuts on on, and on price level of prices of innovatio and output quality n rivals until competiti ve price is reached) (bertrand paradox) Consumer perfect perfect than than r (+) competiti competiti perfect perfect. Producer on, on, competiti competiti higher higher on, higher on, higher. Welfar e monopol monopol monopoly monopoly y y. Productiv e (+) ncy e (+) e (+/-) e (+) e (+) e (+) Started with the ambition to overcome the bertrand model (namely in capacity constraints and product differentiation) Capacity constraints: you can charge any price you like assuming that you can also provide any number of output consumers might like. Product differentiation: typically, in all markets, the products you buy aren"t exactly substitutes.

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QUESTION 1

Stackelberg duopoly game is also known as the ________ model. If we change the Stackelberg ______ competition game to a simultaneous-move game, we get the ______ game results.

	A.	leader-follower, quantity; Cournot
	B.	Competitive fringe; price; backward induction
	C.	leader-follower, quantity; Bertrand
	D.	entry, price; Cournot

QUESTION 2

Comparing Stackelberg and Cournot competition results, we can say that the _____ is better off while the ______ is worse off under Stackelberg than under Cournot results. This result show that there is _______________ advantage.

	A.	entrant, incumbent, investment
	B.	leader, follower, first-mover
	C.	follower, leader, a size
	D.	incumbent, entrant, first-mover

QUESTION 3

Mark all the FALSE statements

	A.	An equilibrium is a collection of strategies (and a strategy is a complete plan of action), whereas an outcome describes what will happen only in the contingencies that are expected to arise, not in every contingency that might arise.
	B.	In games of complete but imperfect information, backward induction is still the strongest process to solve the model to get unique equilibrium.
	C.	All subgame perfect Nash equilibria (SPNE) are Nash equilibria (NE), but not all Nash equilibria is SPNE
	D.	We cannot apply the notion of Nash equilibrium to dynamic games of complete information if we allowed a player s strategy to leave unspecified actions in some contingencies.
	E.	A game can be of perfect information whenever Nature or Luck does not play, each information set does not necessarily need to have a single node.

QUESTION 4

True or false. Mark the correct sequence:
I. Simultaneity of moves means that these games have imperfect information.
II. Dynamic games of complete and perfect information do not necessarily need that a player observes all the previous moves, just part of them are fine.
III. Backward induction and subgame perfect equilibrium concept lead to the same result in games of incomplete information.
IV. Any game in extensive form is a subgame itself.

	A.	TFFT
	B.	TTTF
	C.	FTFF
	D.	TTFT

QUESTION 5

The subgame perfect Nash equilibrium is the equilibrium associated with ____________ outcome. Subgame perfect equilibrium ________ non-credible threats.

	A.	Maxmin; involves
	B.	the backward induction; does not involve
	C.	Iterative deletion of weakly dominated strategies; rules out
	D.	the backward induction; includes

You have been hired as a consultant by your local mayor to look at the various market structures. Your role is to provide analysis and answers to these important questions that will help the mayor understand the structures of many of the businesses in his city: Describe each market structure discussed in the course (perfect competition, monopolistic competition, oligopoly, and monopoly) and discuss two of the market characteristics of each market structure. Identify one real-life example of a market structure in your local city and relate your example to each of the characteristics of the market. Describe how high entry barriers into a market will influence the long-run profitability of the firms. Explain the competitive pressures that are present in markets with high barriers to entry. Explain the price elasticity of demand in each market structure and its effect on the pricing of its products in each market. Describe how the role of the government affects each market structure's ability to price its products. Discuss the effect of international trade on each market structure.

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You have been hired as a consultant by your local mayor to look at the various market structures. Your role is to provide analysis and answers to these important questions that will help the mayor understand the structures of many of the businesses in his city: Describe each market structure discussed in the course (perfect competition, monopolistic competition, oligopoly, and monopoly) and discuss two of the market characteristics of each market structure. Identify one real-life example of a market structure in your local city and relate your example to each of the characteristics of the market. Describe how high entry barriers into a market will influence long-run profitability of the firms. Explain the competitive pressures that are present in markets with high barriers to entry. Explain the price elasticity of demand in each market structure and its effect on pricing of its products in each market. Describe how the role of the government affects each market structureâs ability to price its products. Discuss the effect of international trade on each market structure. Your paper will need to include a title page, a reference page, and in-text citations properly formatted according to the APA style guide. Also, your content should be eight to ten pages, which does not include your reference or title page. You will need to include at least five scholarly sources from the Ashford Library in your paper as part of your research to support your analysis.

Economics 3366A/B Study Guide - Quiz Guide: Perfect Competition, Oligopoly, Takers

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