Economics Homework Nine - Model - Revision history

AddisonDM at 01:12, March 9, 2011

2011-03-09T01:12:36Z

AddisonDM at 03:32, March 5, 2011

2011-03-05T03:32:14Z

Aschlafly: Protected "Economics Homework Nine - Model": model answes are complete ([edit=sysop] (indefinite) [move=sysop] (indefinite))

2009-11-18T20:16:18Z

Protected "Economics Homework Nine - Model": model answes are complete ([edit=sysop] (indefinite) [move=sysop] (indefinite))

Aschlafly: /* Honors */ corrected

2009-11-18T20:15:36Z

Honors: corrected

Aschlafly: /* Honors */ better

2009-11-18T20:13:34Z

Honors: better

Aschlafly: /* Honors */ better

2009-11-18T20:08:30Z

Honors: better

Aschlafly: /* Honors */

2009-11-18T04:36:24Z

Honors

Aschlafly: /* Honors */ longer explanation

2009-11-18T04:36:04Z

Honors: longer explanation

Aschlafly: /* Honors */ done

2009-11-18T04:15:09Z

Honors: done

Aschlafly: done

2009-11-18T04:14:18Z

done

← Older revision		Revision as of 01:12, March 9, 2011
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−	1. Identify an industry not mentioned in the lecture that is an oligopoly, and explain why.	+	1. Identify an industry not mentioned in the lecture that is an [[oligopoly]], and explain why.

	:Video game companies like Nintendo, Sony and X-box (don't know who makes X-box) is an example of an oligopoly, because there is few competitors. It takes a lot of time effort and money to make a new company with its own system and games. And most of the systems are very similar. (Seth)		:Video game companies like Nintendo, Sony and X-box (don't know who makes X-box) is an example of an oligopoly, because there is few competitors. It takes a lot of time effort and money to make a new company with its own system and games. And most of the systems are very similar. (Seth)

← Older revision		Revision as of 03:32, March 5, 2011
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	:He raises his price until marginal revenue equals marginal cost .... (Elizabeth)		:He raises his price until marginal revenue equals marginal cost .... (Elizabeth)
		+
		+	[[Category:Economics lectures]]

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 <br>
-:In the corrected version above, from the point (50,50) neither firm can increase its own profits by reducing its own output.  So that is equilibrium.  To check the answer, we can start from (75,75).  From there, either firm can increase its profits by increasing its output, and it does.  But from the new point the other firm can increase its profits by increasing its output, and the market ends up at where both firms have have increased their output, with profits of (50,50).  Spend a few minutes trying each approach to confirm that is the equilibrium.  (Teacher)
+:In the corrected version above, from the point (50,50) neither firm can increase its own profits by reducing its own output.  So that is equilibrium.  To check the answer, we can start from (75,75).  From there, either firm can increase its profits by increasing its output, and it does.  But from the new point the other firm can increase its profits by increasing its output, and the market ends up at where both firms have increased their output, with profits of (50,50).  Spend a few minutes trying each approach to confirm that is the equilibrium - the Nash equilibrium.  (Teacher)
 . Monopolies: should the government regulate them?  Or is regulation worse?

@@ Line 63: / Line 63: @@
 <br>
-:Teacher's Note: Unfortunately, there is a mistake in the ''ordering'' of the paired numbers used in this problem, which I realized only after grading the answers.  The numbers were in the wrong order because a firm's profits should increase, not decrease, when it increases output in an oligopoly.  All students correctly realized that the equilibrium must be where the profits are equal, either (50,50) or (75,75).  As mistakenly written above, we can start from (50,50) and realize that one of the firm's can increase its profits by reducing output, which takes us to (25,100).  But then the other firm can increase its profits by reducing output, which takes us to equilibrium at (75,75).  Any movement away from that point would start of chain of events that would lead back to that point, so it is a true equilibrium.  But that is an uninteresting solution, and unrealistic in a free market.
+:Teacher's Note: Unfortunately, there is a mistake in the ''ordering'' of the paired numbers used in this problem, which I realized only after grading the answers.  The numbers were in the wrong order because a firm's profits should increase, not decrease, when it increases output in an oligopoly.  All students correctly realized that the equilibrium must be where the profits are equal, either (50,50) or (75,75).  As mistakenly written above, we can start from (50,50) and realize that firm B can increase its profits by reducing output, which takes us to (25,100).  But then the other firm can increase its profits by reducing output, which takes us to equilibrium at (75,75).  Any movement away from that point would start of chain of events that would lead back to that point, so it is a true equilibrium.  But that is an uninteresting solution, and unrealistic in a free market.
 :The chart should have had the ordered pairs reversed:
+<div style=float:left; padding: 20px">
 {|style="border-collapse:collapse"
 |-
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 {{clear}}
 <br>
 . Monopolies: should the government regulate them?  Or is regulation worse?

@@ Line 63: / Line 63: @@
 <br>
-:[Teacher's Note: Unfortunately, there is a mistake in the ordering of the paired numbers used in this problem, which I realized only after grading the answers.  The numbers were in the wrong order because a firm's profits should increase, not decrease, under this situation.  All students correctly realized that the equilibrium must be where the profits are equal, either (50,50) or (75,75).  If the profits increased for each firm when it increases profits, then the equilibrium would be (50,50), which would be the correct answer on an exam.  But under the numbers provided, firms increase profits by reducing output, and (75,75) is the correct answer.]
+:Teacher's Note: Unfortunately, there is a mistake in the ''ordering'' of the paired numbers used in this problem, which I realized only after grading the answers.  The numbers were in the wrong order because a firm's profits should increase, not decrease, when it increases output in an oligopoly.  All students correctly realized that the equilibrium must be where the profits are equal, either (50,50) or (75,75).  As mistakenly written above, we can start from (50,50) and realize that one of the firm's can increase its profits by reducing output, which takes us to (25,100).  But then the other firm can increase its profits by reducing output, which takes us to equilibrium at (75,75).  Any movement away from that point would start of chain of events that would lead back to that point, so it is a true equilibrium.  But that is an uninteresting solution, and unrealistic in a free market.
 . Monopolies: should the government regulate them?  Or is regulation worse?

← Older revision	Revision as of 20:16, November 18, 2009
(No difference)

@@ Line 64: / Line 64: @@
 After answering question 6, then answer two of these three questions:
-:[Teacher's Note: There is a mistake in this problem.  The numbers are unrealistic and points were deducted for inadequate explanation.  We will revisit this problem in the next homework.]
+:[Teacher's Note: Unfortunately, there is a mistake in the ordering of the paired numbers used in this problem, which I realized only after grading the answers.  The numbers were in the wrong order because a firm's profits should increase, not decrease, under this situation.  All students correctly realized that the equilibrium must be where the profits are equal, either (50,50) or (75,75).  If the profits increased for each firm when it increases profits, then the equilibrium would be (50,50), which would be the correct answer on an exam.  But under the numbers provided, firms increase profits by reducing output, and (75,75) is the correct answer.]
 . Monopolies: should the government regulate them?  Or is regulation worse?

@@ Line 2: / Line 2: @@
 :Video game companies like Nintendo, Sony and X-box (don't know who makes X-box) is an example of an oligopoly, because there is few competitors. It takes a lot of time effort and money to make a new company with its own system and games. And most of the systems are very similar. (Seth)
 .  Order the types of industries from those having the lowest price (due to the greatest competition) to those having the highest price (due to the least competition).
@@ Line 62: / Line 64: @@
 After answering question 6, then answer two of these three questions:
+:Teacher's Note: There is a mistake in this problem.  The numbers are unrealistic and points were deducted for inadequate explanation.  We will revisit this problem in the next homework.
 . Monopolies: should the government regulate them?  Or is regulation worse?
@@ Line 74: / Line 76: @@
 . How does a monopolist maximize his profits?
+:He raises his price until marginal revenue equals marginal cost .... (Elizabeth)