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Ag Econ Chapter 12 - cartel are not legal because they are...

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1 – 2 pages on research about a famous economist – due the last week of classes. Can double space as long as it is over 1 page. Chapter 12 monopolistic – examples retailers such as gas stations, mass merchandisers, or clothing stores manufacturers such as auto, Ready to eat cereal or steel unique aspects of monopolistic ~ differentiated product find a economist and research their lives and theories. what is their most important theories. one page if it is single spaced, just an outline, main info, where he studied, what is his contribution, evaluate if it worthwhile one distinguishing feature one decision’s will affect others interdependence key example of tactics, strategies, moves, and countermoves lee I coka QUESTION ON CONCENTRATION RATIOS different models of oligopoly Cartel graphic representation
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Unformatted text preview: cartel are not legal because they are trying to monopolize, they segmented the market perfect competition (assume firm/country is covering at least AVC) if cartel is organized to raise price then industry Quantity must be cut back, by fixing quotas for each supplier in the case of OPEC each country set a quota if each country is allocated a quantity, at price 1, the new demand curve facing the firm is demand 1 (which is simply a slice of the industry demand curve) restrains trade Price Leaders Sales Maximizer MR = 0 operating at a loss to achieve a goal. this can be used to gain market share KNOW THE GRAPH ON PG 156 KINKED DEMAND CURVE!!! – IMPORTANT Kinked – explains sticky prices connecting two demand curves why firms are reluctant to change prices...
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