Describe standard economic models of oligopolies focusing on output and price competition, respectively.

Expert Solution

The three models used to study pricing and output by oligopolies are: The kinked-demand curve model. Price leadership model and collusive pricing model.

The kinked demand curve model seeks to explain the reason of price rigidity under oligopolistic market situations. ... A kinked demand curve represents the behavior pattern of oligopolistic organizations in which rival organizations lower down the prices to secure their market share, but restrict an increase in the prices.

Rahul Sunny answered 2 years ago

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Standard economic models treat the economy as a stable system in equilibrium.

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Suppose that the output market is in perfect competition with the price of $10 per unit...

Suppose that the output market is in perfect competition with the price of $10 per unit and input market is a monopsony with the following information assuming that labor is the only input. Wage (W) L MP W MRP TP TR 1 20 20 200 20 200 2 18 40 180 38 380 3 16 60 160 54 540 4 14 80 140 68 680 5 12 100 120 80 800 6 10 120 100 90 900 7 8 140...

Suppose that output market is in a perfect competition with the price of $10 per unit...

Suppose that output market is in a perfect competition with the price of $10 per unit and input market is a monopsony with the following information assuming that labor is the only input. L: 1,2,3,4,5,6,7,8,9,10 MP: 20,18,16,14,12,10,8,6,4,2 W: 20,40,60,80,100,120,140,160,180,200 a. Fill in the missing values. b. What are the optimal level of employment and the corresponding profit for this firm? c. Graphically explain the profit maximization behavior for this firm.

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Which of the following is a main objection to the standard Bertrand model of price competition...

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2. List the characteristics of all the market models and their economic implications (e.g. price taker...

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Recognize the key characteristics of monopolistic competition Describe the economic efficiency and other characteristics of monopolistic...

Recognize the key characteristics of monopolistic competition Describe the economic efficiency and other characteristics of monopolistic competition in the long run Explain the economic role of advertising Define price discrimination Compare and contrast perfect and imperfect price discrimination Identify an oligopoly as a market structure where firms are highly interdependent Describe collusion and strategic pricing decisions Describe game theory and why it is applied to oligopoly

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