pres08_ass6_sol - W1105.002 Principles of Economics...

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W1105.002 Principles of Economics Assignment 6, due March. 6 th 2008 - Solutions Before submitting your assignment, please make a copy for your own use. Your assignment will not be returned to you before the recitation sessions. Be sure you include: Name: Recitation Section # Multiple Choice Questions: 1. Which of the following statements is not true for a perfectly competitive market? a. firms always earn zero economic profits. b. marginal cost is equal to marginal benefit. c. in the long run, the product is produced at the lowest possible cost. d. there is allocative efficiency. e. total surplus is maximized. 2. The whole-sale market for jeans is perfectly competitive (unlike the retail market for jeans). Not surprisingly the industry is characterized by a. a high concentration ratio. b. hardly any barrier to entry. c. significant economies of scale. d. a relatively small number of suppliers. e. all of the above. 3. A strategy that is the best for a firm, no matter what strategies other firms use is a a. best response strategy b. Nash strategy c. repeated strategy d. dominant strategy e. sequential strategy. 4. Oligopolistic firms are less likely to engage in a price war if a. the two firms have very different cost structures b. the price elasticity of demand at each firm is less than one. c. each firm has excess capacity, that is able to increase the number of customers served without increases in ATC. d. they sell almost identical products. Definitions: Prisoner’s dilemma Economics efficiency Exercises: 1. In 1995 the US Department of Defense (DoD) started the development of a new Joint Fighter Aircraft. Under common procurement procedures, the DoD contracted out the design and development of the aircraft to a number of private companies. To assign the contract, the DoD organized a sealed-bid auction. Different companies interested in
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This homework help was uploaded on 04/08/2008 for the course ECON W1105 taught by Professor Musatti during the Fall '07 term at Columbia.

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pres08_ass6_sol - W1105.002 Principles of Economics...

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