|These questions are from the test bank. Some questions have multiple parts.|
Short Answer Essay
1. Why would a traditional company adopt e-commerce?
2. What is cannibalization, in terms of a traditional company adopting e-commerce?
3. Firms are always devising methods to limit competition and erect market barriers. Identify the market barriers.
4. What is market power?
5. Distinguish between economies of scale and economies of scope.
6. Distinguish between profit maximization and revenue maximization.
7. What is x-inefficiency and where would you find it?
8. Identify economies of scope by using the cost function, C(q1, q2) in your discussion.
9. You have the game below, where two firms, have an advertising war.
10. You have the game below:
11. You have the market inverse demand function, P(Q) = 200 - 2Q, where Q = q1 + q2. Two firms are in the market. They are Cournot competitors, and each firm's cost function is C(qi) = 20 qi. This market has entry barriers and no new firms can enter the market.
12. You have an oligopoly market with a profit function, pi = P(q1 + q2)qi - C(qi). Please derive the Lerner Index for the oligopoly. The price elasticity of demand is, e = - (dQ / dP)(P / Q)
13. You have a Bertrand model with two firms. Firm 1 has the demand function below. Firm 2 has a similar demand function.
14. Define each the following using at least one sentence.
15. You have the demand function for the market, P(Q) = 100 - Q. A pure monopoly has a marginal cost function, MC = 15, while a monopoly that suffers from x-inefficiency has a marginal cost function, MCX = 30.
16. You have the demand function for the market, P(Q) = 100 - Q. A pure monopoly has a marginal cost function, MC = 15, while a monopoly that invests into research and development has a marginal cost function, MCR = 6.
17. Appraise the economics of first-degree price discrimination. Please graph and explain with a demand function and marginal cost function.
18. What is the second-degree price discrimination? Please show and explain using two demand functions and one marginal cost function.
19. What is the third-degree price discrimination? Please show and explain using two demand functions and one marginal cost function.
20. Distinguish between second-degree and third-degree price discrimination.
21. Using a demand, marginal revenue, and marginal cost functions, please explain what happens if a monopoly offers a better quality good.
22. Why do some firms simultaneously sell a high-quality product and a low-quality product?
23. A market has five firms with the market shares: 30%, 25%, 20%, 15%, and 10%.
24. Please draw a demand, marginal revenue, average total cost, and marginal costs functions for a monopolistically competitive firm.
25. (a) What is average cost pricing? Please show and explain with a demand, long-run average cost, marginal revenue, and marginal cost functions.
26. (a) What is Ramsey pricing? Please show and explain with a demand, long-run average cost, marginal revenue, and marginal cost functions.