econ 426 problems1_spr10

econ 426 problems1_spr10 - ECON 426 Sample Questions for...

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ECON 426 Sample Questions for First Midterm True/False/Uncertain . (1) In any game between two firms that is repeated only once, the outcome will be perfect competition (P=MC). (2) Mergers that reduce costs will increase welfare and should be allowed by antitrust authorities. Models of Oligopoly . Economists have developed several models to explain the strategic interaction between firms that compete against one another. 1. Some of these models assume that firms only compete against each other once . a. Give a real-world example where “one-shot” interaction seems to be a reasonable model of reality. Choose your own example rather than one we discussed in class. b. Suppose firms in a market choose a price and then fill all orders demanded at that price (Bertrand competition). How competitive do you expect the outcome to be? c. Suppose firms in a market choose a given quantity to produce, and then offer that quantity at the market price (Cournot competition). How competitive do you expect the outcome to be? d.
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This note was uploaded on 02/13/2012 for the course ECON 426 taught by Professor Puller during the Fall '08 term at Texas A&M.

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econ 426 problems1_spr10 - ECON 426 Sample Questions for...

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