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ECON 294 Monopolistically Competitive and Oligopolistic Product Markets...

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"Need help on week 5 ECON 294 Monopolistically Competitive and Oligopolistic Product Markets
the need help looking for more information about Model- cell Phone for implication of equity please Week 5 Discussion: Monopolistically
Competitive and Oligopolistic Product
Markets
JohnNash
OligopolyorMonopolisticCompetition,andthatmeansTeamWork
Again!Youareaskedtocollude.Youareaskedtocollaboratewithat
leastoneotherclassmateandthatmeansYourStudyGroup.Your
Groupneedstochoosetopostathreadforoneofthetwomodelsbelow
(OligopolyorMonopolisticCompetition).
Note:Noneedforyourteamtopostinboth,butitisnecessarythatyou
respondtoyourfellowclassmates'selections!
Option #1: If You Choose an Oligopoly.
Howwouldarationalbusinesspersonformulateproductionand
pricingstrategiesinanoligopolisticmarket?
Reviewthekeycharacteristicsofoligopolisticmarketsinyourtextand
theexpectedoutcomesforthevarioussituationsdescribed.Youmay
findapayoffmatrixhelpfulinunderstandingthemutualinterdependence
betweenproducersinanoligopoly.JohnNash(asplayedbyRussell
CroweinABeautifulMind)certainlydid.
ThinkaboutsomerealworldmarketswhichcomeclosetotheOligopoly
characteristics.Finally,whataretheimplicationsforefficiencyand
equity?Youshouldnotehowprice/costmarginsinthelongrun
equilibriumsituationsforthesemarkets.Ispriceequaltoaveragecost?If
so,neitherproducerorconsumerisunfairlyrippedoff.Ispriceequalto
minimumaveragecost?Ifsothentheengineersmustbehappyasthere
isnootheroutputlevelyieldinghigherproductivityandlowercostandwe
haveproductiveefficiency.Ispriceequaltomarginalcost?Ifsothen
thereisnoreallocationofresourceswhichwouldmakesocietybetteroff
andwehaveallocativeefficiency.Alternatively,agivenmarketisunfair
toconsumersifpriceisgreaterthanmarginalcost,productivityinefficient
ifpriceisgreaterthanminimumaveragecost,andallocativelyinefficient
ifpriceisgreaterthanmarginalcostsincewevaluemoreofthegoodin
questionthanothergoodsthatarecurrentlybeingproducedwiththe
sameresources.Thinkaboutthesethings(characteristicsofoligopoly
resultingbehaviorbybusinessdecisionmakers,consequentprice/cost
margins,andimplicationsforefficiencyandequity).
Option #2: If you Choose a Monopolistic Competition
Market.
Howwouldarationalbusinesspersonformulateproductionand
pricingstrategiesinamonopolisticallycompetitivemarket?
Reviewthekeycharacteristicsofmonopolisticallycompetitivemarketsin
yourtextandtheexpectedoutcomesforthevarioussituationsillustrated
above.Thinkaboutrealworldproductsandserviceswhichcomecloseto
thosecharacteristics.Infact,youwillfindthatmostofwhatyouprobably
buyonadailybasisaremonopolisticallycompetitiveproducts.You
shouldnotehowprice/costmarginsinthelongrunequilibriumsituations
forthesemarkets.Ispriceequaltoaveragecost?Ifso,neitherproducer
orconsumerisunfairlyrippedoff.Ispriceequaltominimumaverage
cost?Ifso,thentheengineersmustbehappyasthereisnootheroutput
levelyieldinghigherproductivityandlowercostandwehaveproductive
efficiency.Ispriceequaltomarginalcost?Ifso,thenthereisno
reallocationofresourceswhichwouldmakesocietybetteroffandwe
haveallocativeefficiency.Alternatively,agivenmarketisunfairto
consumersifpriceisgreaterthanmarginalcost,productivityinefficientif
priceisgreaterthanminimumaveragecost,andallocativelyinefficientif
priceisgreaterthanmarginalcostsincewevaluemoreofthegoodin
questionthanothergoodsthatarecurrentlybeingproducedwiththe
sameresources.
Here's what I would like you to do
AsaTEAM,identifyamarketthatyourteambelieveis
oligopolistic""or""monopolisticcompetition.""Yourtextcanhelpyouwith
this.YoucanNOTpickaproductthatwasselectedlastweekorthis
weekbyyourself,classmateoranotherteam(wellnotifyouwantcredit
foritanyways).
1.
Telluswhythemarketyouselectedmeetsthecriteriaofan
oligopolyormonopolisticcompetition.Thentelluswhatthatmeansfor
rationalbusinesspriceandproductiondecisions.
2.
Evaluatetheresultin(2)fromperspectivesofefficiencyand
equitydrawinguponprice/costmarginsforyourexplanation.Clickonthe
highlightedtermsaboveifyouareunclearonthis.Youmaywanttoalso
considerissuesinvolvingthestabilityofcollusivecartels.Pleasestart
withyourassignedstudyteams.IfyoufindyourselfsoloafterTuesday
midnight(C.S.T.)becauseofteaminactivity,youmayjoinwithanother
soloclassmate.Asalways,youwillprofitbyreadingandrespondingto
yourfellowbuddingeconomists'postings.
3.
Due Date Reminder"

 

Solution ID:350931 | This paper was updated on 26-Nov-2015

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