Monday, December 04, 2006

Quiz 9 due Tuesday Dec 5th

Quiz 9 – Intro to Micro Economics.
Professor Matthew Festa
Due in Class Tuesday Dec 05

1) State the 4 assumptions of perfect competition and then state the assumption(s) that monopolistic competition breaks. State the assumption(s) that an oligopoly breaks (2 points)

2) What is allocative efficiency? What is productive efficiency? Why does monopolistic competition fail to meet both of these? (2 points)

3) Explain why on the above graph, the demand curve slopes down for a monopolistically competitive firm. (2 points).

4) On the below table, explain which box would be the best case scenario for These two companies. What is Nash equilibrium? Explain why that is the point the market will tend towards. Think of Company A as Coca Cola and Company B as Pepsi. The numbers are profits for both companies in billions (so 3 = $3bn). (3 points).

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