MT445 A6

Unit 6

[MT445 | Managerial Economics]

Assignment: Oligopoly and Monopolistically Competitive Firms

Student Name:

In this Assignment, you will compute total cost, total revenue, and total profit/loss. Based on the computed results, you will determine the optimal quantity of output, which minimizes loss under a monopolistically competitive market. In addition, you will also evaluate the marketing strategies of oligopoly market firms.

Instructions: Answer all of the following questions. You are required to follow proper APA format. Read the Criteria section below for more information before you begin this Assignment.

1. Do the firms in an oligopoly act independently or interdependently? Explain your answer.

2. A monopolistically competitive firm has the following demand and cost structure in the short run.

Output Price FC VC TC TR Profit/Loss

0 $90 $90 $ 0 ____ ____ ________

1 80 ____ 40 ____ ____ ________

2 70 ____ 80 ____ ____ ________

3 60 ____ 140 ____ ____ ________

4 50 ____ 220 ____ ____ ________

5 40 ____ 320 ____ ____ ________

6 30 ____ 440 ____ ____ ________

7 20 ____ 580 ____ ____ ________

a. Complete the table.

b. What level of output maximizes profit or minimizes loss?

c. Should this firm operate or shut down in the short run? Why?

3. Suppose that Wal-World and Tarbo are independently deciding whether to implement a new bar code technology or use the existing bar code. It is less costly for their suppliers to use one system and the following payoff matrix shows the profits per year for each company resulting from the interaction of their strategies.

1. Does Wal-World have a dominant strategy? Briefly explain.

1. Does Tarbo have a dominant strategy? Briefly explain.

1. Is there a Nash Equilibrium in this game? Briefly explain.

Criteria

· This Assignment should be written in Standard English and demonstrate exceptional content, organization, style, and grammar and mechanics.

· Respond to the questions in a thorough manner, providing specific examples where asked.

· Your sources and content should follow proper APA format (A title page is not required). (Review the APA formats found in the Kaplan Writing Center. To access the Kaplan Writing Center, select this link.).

· Review the grading Rubric to ensure all points have been captured in the paper.

References (add references in APA format below)

Directions for Submitting your Assignment

Complete your Assignment in this Word document. Submit your Assignment by the end of Unit 6 by clicking the Dropbox tab and select Unit 6: Assignment from the dropdown menu, then attach your file. Make sure to save a copy of your work and be sure to confirm that your file uploaded correctly.

Unit 6 Assignment
Content and Analysis	Points Possible	Points Earned
Problem #1 Do the firms in an oligopoly act independently or interdependently? Explain your answer.	6
Problem #2 A monopolistically competitive firm has the following demand and cost structure in the short run. Complete the table (a)	16
What level of output maximizes profit or minimizes loss? (b)	4
Should this firm operate or shut down in the short run? Why? (c)	4
Problem #3 Does Wal-World have a dominant strategy? Does Tarbo have a dominant strategy? Is there a Nash Equilibrium in this game? Briefly explain. (a-c)	9
Writing style, grammar, and APA format.	6
Total	45

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