Home Assignment #4
Name:
Comparison of Perfect Competition, Monopoly, Bertrand, Cournot, and Stackelberg Duopoly
This worksheet can be used to calculate equilibrium outcomes under different market structures for linear demand and constant marginal cost. F

Homework assignment #3 due Oct 29 in class
Answer the following questions for each problem below:
a) Set up the described game as a normal form (simultaneous-move) game. Calculate the players
payoffs and enter them in a 2x2 table (normal form representati

Managerial Economics: A Strategic Approach
Models and Maximization
Read Chapters 2 and 3.
Plan:
1
Models Why are economists fond of models?
Math Review
Optimization
Derivatives
Excel and Graphs
Tools for Decision Making
Economists Do It With Models - Part

Managerial Economics
Chapter 0 Math Review
Problem One
Invert the following functions.
(a) y = 18x 12
(b) 3y = 12x - 15
Solution
(a) x = y/18 + 2/3
(b) x = (1/4)y + 5/4
Problem Two
Solve the following equations for x.
(a) 4x - 3 = x + 9
(b) 3x - 4(8-x) =

Chapter 6: Strategy in a Market with Two
Firms (Homogeneous Product Duopoly)
Assume n=2, asymmetric costs, and
homogenous product
Models
Cournot model
Bertrand model
Stackelberg model
1
Introduction
rather than work with general oligopoly models,
we wi

OUTPUT AND PRICE UNDER PERFECT COMPETITION
OBJECTIVE:
This model determines the optimal level of output for a firm operating in a perfectly competitive environment
(i.e. it is faced by a horizontal demand curve and can sell as much as it wants at the prev

Managerial Economics: A Strategic Approach
Class 2. Basics, Firms, Costs
Read Chapters 2 and 3.
Plan:
1
Basics
Demand Functions
Elasticity
Calculating CS, PS, W, and DWL
Firms
Existence
Objective of the firm
Principal-Agent Problem
Costs
Profit maximizati

Chapter 8: Entry Deterrence and
Accommodation
Tough and Soft Commitments
Taxonomy of Business Strategies:
overinvestment to look tough (top dog) or soft (fat cat)
underinvestment to look tough (lean and hungry look)
or soft (puppy dog)
Entry Deterrence a

SUPPLY AND DEMAND
OBJECTIVE:
This program is designed to graphically illustrate the supply and demand equilibrium, particularly how equilibrium
changes when supply and demand curves change.
INPUTS (will appear in blue):
As constructed here, this module al

398bbdd782f391fdcbdb21c4f698d505686300d2.xlsx06/09/2016
Pricing of Multiple Products
Would a monopolist selling two products (Product 1 and Product 2) charge higher or lower prices than two independent firms selling these products?
Product 1
Product 2
Dem

Managerial Economics
Chapter 0 Math Review
Problem One
Invert the following functions.
(a) y = 18x 12
(b) 3y = 12x - 15
Problem Two
Solve the following equations for x.
(a) 4x - 3 = x + 9
(b) 3x - 4(8-x) = 40 - 5x
(c) 4x + 9 = (x/4) + 13
Problem Three
Sol

Horizontal Integration: why do firms produce
different goods for the same market?
Toyota produces the Camry and the Corolla
Chapter
10: Vertical and Horizontal
Vertical Integration: why do some firms produce
Integration
goods which are used as intermedi

Managerial Economics: A Strategic Approach
Class 1. Introduction
This week: Read Chapter 1. Introduction
For next week: Read Chapters 2 and 3.
Plan:
Introductions
Syllabus
Basics
1
Demand Functions
Elasticity
Calculating the Equilibrium Price and Quantity

MARKET STRUCTURE: LINEAR DEMAND AND LINEAR SUPPLY*
1)
In the green cells, type the intercept and slope of the inverse market demand function P = a - bQ and then PRESS ENTER
Intercept (a)
100
Slope (b)
8
2)
In the green cell, type the intercept and slope o

Tax Incidence and Deadweight Loss
Important Ideas and Vocabulary
Unit (Specific) Tax
Paying the tax versus bearing the burden of the tax
The ability to shift or pass on a tax depends on the elasticities of demand and supply
Tax incidence
Deadweight Loss (

Tax Incidence and Deadweight Loss
Important Ideas and Vocabulary
Unit (Specific) Tax
Paying the tax versus bearing the burden of the tax
The ability to shift or pass on a tax depends on the elasticities of demand and supply
Tax incidence
Deadweight Loss (

Example: Contest
Let us consider the standard contest
(Tullock,1980), where n symmetric (identical)
contestants compete over a single prize of
value v.
With probability Pi contestant i wins the
contest.
ui Pi v xi
The expected net payoff of the risk neutr

Managerial Economics
Chapter 0 Math Review
Problem One
Invert the following functions.
(a) y = 18x 12
(b) 3y = 12x - 15
Solution
(a) x = y/18 + 2/3
(b) x = (1/4)y + 5/4
Problem Two
Solve the following equations for x.
(a) 4x - 3 = x + 9
(b) 3x - 4(8-x) =

Horizontal Integration: why do firms produce
different goods for the same market?
Toyota produces the Camry and the Corolla
Chapter
10: Vertical and Horizontal
Vertical Integration: why do some firms produce
Integration
goods which are used as intermedi

Chapter 18: Auctions
When you are finished with this chapter, you
should understand:
What an auction is
How to analyze an auction as a game with
asymmetric information
The characteristics of different types of auctions
Types of strategies used in differe

As of: 06/09/2016
POINT ELASTICITY
OBJECTIVE:
This program calculates point elasticity of demand.
INPUTS (will appear in blue):
The inverse demand curve is of the form p=a-bq. Values for coefficients
a and b should be entered in cells G21 and G23, respect

Tax Incidence and Deadweight Loss
Important Ideas and Vocabulary
Unit (Specific) Tax
Paying the tax versus bearing the burden of the tax
The ability to shift or pass on a tax depends on the elasticities of demand and supply
Tax incidence
Deadweight Loss (

Managerial Economics
Chapter 0 Math Review
Problem One
Invert the following functions.
(a) y = 18x 12
(b) 3y = 12x - 15
Solution
(a) x = y/18 + 2/3
(b) x = (1/4)y + 5/4
Problem Two
Solve the following equations for x.
(a) 4x - 3 = x + 9
(b) 3x - 4(8-x) =

Chapter 8: Entry Deterrence and
Accommodation
Tough and Soft Commitments
Taxonomy of Business Strategies:
overinvestment to look tough (top dog) or soft (fat cat)
underinvestment to look tough (lean and hungry look)
or soft (puppy dog)
Entry Deterrence a

5.22 10 8 6 = 480
5.24 215 = 32,768
5.28 a) True b) False c) True d) False
5.42 a) 11C2 = 55 b) 11C3=165
5.46 a) 1/6 b) 1/2 c) 1/3
6.2 Since U V = cfw_e, h, the scholarship is awarded to Mr. Earl or Mr. Hall.
6.14 Region 1 represents the event that a grad

Econ 400 List of Key Topics Before Midterm Exam (TENTATIVE)
Chapter 1
Optimization, first-order condition, second-order condition, rules for taking derivatives, demand functions, inverse
demand, elasticity, CS, PS, W, DWL
Excel: point elasticity of dema