Chapter 14

Question 1

The Chamberlain-Robinson model of monopolistic competition assumes…

Answer 1

…there are a large number of producers and products are close but IMPERFECT substitutes
This is defined as an Industry group

Question 2

Industry group is

Answer 2

A group of producers who produce products similar but not perfect substitutes for one another

Question 3

Perfect symmetry between firms allow us to assume

Answer 3

Firms face identical demand for their products

Question 4

A fundamental feature of the chamberlain-Robinson model is

Answer 4

A perfect symmetry between firms

Question 5

Economic profit of a Chamberlinian firm is equal to

Answer 5

Total revenue minus total cost

Question 6

Cournot Oligopoly Model

Answer 6

Oligopoly model in which each firm assumes that rivals will continue producing at their current output levels

Question 7

Bertrand oligopoly Model

Answer 7

Oligopoly model in which each firm assumes that rivals will continue charging their current prices

Question 8

Reaction function

Answer 8

A curve that tells the profit-maximising level of output for one oligopolist for each amount supplied by another

Question 9

Equilibrium price and industry profit for
Bertrand model

Answer 9

Equilibrium price = marginal cost
Profit = 0

Question 10

In stupid the StACkElbERg model if firm 1 is the leader…

Answer 10

Start by solving the profit maximisation of firm 2
(Stupid fucking piece of info that the dumbass bastarding textbook couldn’t just write tf down)

THEN insert firm 2’s reaction function into firm 1’s demand

Question 12

What the FUCK is collusion????¿ :D

Answer 12

Collusion is the collaboration between companies that seek to gain an extensive competitive advantage in the marketplace