« previous next »

Author Question: What is the aspect of imperfect competition that is most distinct from perfect competition? A) ... (Read 52 times)

clmills979

  • Hero Member
  • *****
  • Posts: 551
on: Jul 1, 2018
What is the aspect of imperfect competition that is most distinct from perfect competition?
 
  A) free entry/exit
  B) perfect information
  C) differentiated products
  D) zero profits

Question 2

Suppose market demand is p = 10 - Q. Firms have a fixed entry cost of 5 and no marginal cost. If firm A is the incumbent, can it deter the entry of its rival, firm B?
 
  What will be an ideal response?
Microeconomics ¦ Perloff ¦ 8th Edition
Buy Test-Bank


wshriver

  • Sr. Member
  • ****
  • Posts: 318
Reply #1 on: Jul 1, 2018
Answer to Question 1

C

Answer to Question 2

Firm B's reaction function is qB = 5 - (1/2)qA. The Stackelberg leader quantity is 5 and firm B will produce 2.5. Firm A's profit is 12.5. If firm A produces 6 units for example, firm B's best response is 2 units; however, it would incur a loss and not enter. Firm A's profits by preventing entry would be 24. Thus, firm A can deter entry by overproducing.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Cocaine was isolated in 1860 and first used as a local anesthetic in 1884. Its first clinical use was by Sigmund Freud to wean a patient from morphine addiction. The fictional character Sherlock Holmes was supposed to be addicted to cocaine by injection.

Did you know?

Patients who have undergone chemotherapy for the treatment of cancer often complain of a lack of mental focus; memory loss; and a general diminution in abilities such as multitasking, attention span, and general mental agility.

Did you know?

There are immediate benefits of chiropractic adjustments that are visible via magnetic resonance imaging (MRI). It shows that spinal manipulation therapy is effective in decreasing pain and increasing the gaps between the vertebrae, reducing pressure that leads to pain.

Did you know?

According to research, pregnant women tend to eat more if carrying a baby boy. Male fetuses may secrete a chemical that stimulates their mothers to step up her energy intake.

Did you know?

Vaccines prevent between 2.5 and 4 million deaths every year.

A horse and rider in dressage competition at the Olympics A horse and rider in dressage competition at the Olympics
A stallion with a proven competition record is one criterion for being a suitable sire. A stallion with a proven competition record is one criterion for being a suitable sire.
The work of geneticists is valuable because genes play a role in virtually every aspect of ... The work of geneticists is valuable because genes play a role in virtually every aspect of ...
Filippo Brunelleschi, Sacrifice of Isaac, competition relief commissioned for the doors of the ... Filippo Brunelleschi, Sacrifice of Isaac, competition relief commissioned for the doors of the ...
Family structure is a vital aspect in the socialization of children. Family structure is a vital aspect in the socialization of children.
European swimming competition European swimming competition
Video: The Pressure Flow Model in a Plant

For a complete list of videos, visit our video library