Economics assignment

Extract

[...] There are 5 green grocers in the summer village who agreed to fix prices for basic grocery. Explain whether the agreement will break for each of the following (in some cases you should also consider alternative scenarios) and what new market types might arise: a. A decline in demand as fewer people take holidays b. One of them made an exclusive agreement with a supplier and buys at cheaper prices than the rest c. A fast bus service to the nearest town allows access to a large number of green grocers d. [...]

[...] If the cartel broke down, our individual oligopolist would maximise profits where MC=MR, thus P(D)=90 and Q=40. As a member of the cartel, the individual oligopolist's total revenues are 110*30=3300. As a free rider (assuming other oligopolists maintain the cartel) his total revenues are 110*40=4400. Under oligopoly without a cartel, his total revenues would be 90*40=3600. So his best option to maximize revenues would be to act as a free ride, assuming the others would keep the cartel rather than disbanding it. And of course the makes him a weak link for the cartel's unity. [...]

[...] The kiosk under perfect competition, offers the same products as any other kiosk (no diffrentiation whatsoever), so there is no need for change. The table below shows the demand schedule and total costs for a monopolist. Assuming that output units are indivisible: Find the profit-maximizing price and output combination of the monopolist (use MC and MR) and depict in a diagram. What defines the monopolist as a price-maker and able to secure super-profits? If the industry was perfectly competitive what would be the equilibrium and why (show in diagram above) Suppose that under perfect competition, costs are higher in comparison to monopoly. [...]

[...] Look at total revenues to decide which outcome is better for the individual oligopolist: a. as a member of the cartel, b. as a free rider (assuming other oligopolists maintain the cartel) or c. under oligopoly without a cartel? As a cartel member, does this oligopolist constitute a weak or a strong link for the unity of the cartel? In order to maximise its collective profits, the cartel will choose the point where MC=MR, thus P(D)=110 and Q=120. If they are to divide the market equally between them, Quota equals 120/4=30. [...]

[...] Economics assignment There are many restaurants in the city providing significantly differentiated menus and are currently generating profits. Depict in a diagram showing the profit maximising equilibrium for such a typical restaurant. Will this typical restaurant maintain profits in the long-run? Depict this long run equilibrium for our typical restaurant and explain how this would be different to that of a restaurant under perfect competition. Night clubs in town often change customer target group and redecorate premises. Some are busy for some time while most remain half empty in an ever lasting competitive rotation. [...]