# Suppose that an industry is characterized by a few

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Chapter 9 / Exercise 67
Mathematical Applications for the Management, Life, and Social Sciences
Harshbarger
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17) Suppose that an industry is characterized by a few firms and tacit collusion. We would expect that:a.Monopoly pricing will prevail and large profits will be received byfirms.b.One dominant firm will set prices and others will follow.c.One firm will offer a price discount if any new entrant tries to undercut them and other incumbents will follow.d.All of the above.
18) Depletion of fish stocks through overfishing is a good example of the:
19) A negative externality or spillover cost occurs when:
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Chapter 9 / Exercise 67
Mathematical Applications for the Management, Life, and Social Sciences
Harshbarger
Expert Verified
20) Suppose an upstream firm pollutes a river which imposes costs on a downstream firm. The following matrix shows the monthly payoffs to the upstream and downstream firms when the upstream firm installs, and does not install, a filter21)22)Installs filter23)Does notinstall filter24)Upstream25)\$100 permonth26)\$120 permonth27)Downstream28)\$100 permonth29)\$70 permonthIf the upstream firm has the legal right pollute and bargaining is costless, which of the following statements is correct?
PART B: Critical analysisIn the exam you will be asked to “Answer Questions 21 (15 marks) and Question 22 (10 marks). Question 21 is Compulsory. Question 22 will offer you a choice of 1 of 2 questions). The following is a list of questions from each week’s “Guide to reading” and the lecture material which will help you prepare for the PART B questions. Week 6 (Topic 6)a) The orthodox theory suggests that consumers are sovereign and that therefore free markets are welfare-enhancing machines. Governments shouldn’t interfere. What are the long-run impacts of this perspective? b) If consumers are not sovereign then we can justify doing something. What could be done? (Discussed in Week 6)Week 7 (Topic 7)Orthodox theory assumes that firms are passive responders to market signals. In what ways are firms active in determining the allocation of resources? (Discussed in Week 8)Week 8 (Topic 8)Explain why monopoly and oligopoly market structures undermine the idea that free markets are efficient. What is meant by ‘monopoly capitalism’? In what ways does monopoly