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BUA5ABE: Group Problems and Applications Assessment 2 Word Limit: 2000 words 1. Use a graph to demonstrate the circumstances that would prevail in a...

I need to answer Question 6 and 7.......While answering you have to be aware of Plagarism as well........
1 BUA5ABE: Group Problems and Applications Assessment 2 Word Limit: 2000 words 1. Use a graph to demonstrate the circumstances that would prevail in a perfectly competitive market where firms are experiencing economic losses. Identify costs, revenue and the economic losses on your graph. Using your graph, determine whether this firm will shut down in the short run, or choose to remain in the market. Explain your answer. 2. At its current level of production, a profit-maximising firm in a competitive market receives $12.50 for each unit it produces, and faces an average total cost of $10. At the market price of $12.50 per unit, the firm’s marginal cost curve crosses the marginal revenue curve at an output level of 1000 units. What is the firm’s current profit? What is likely to occur in this market and why? 3. One example of price discrimination occurs in the publishing industry when a publisher initially releases an expensive hardcover edition of a popular novel, and later releases a cheaper paperback edition. Use this example to demonstrate the benefits and potential pitfalls of a price discrimination pricing strategy. 4. Describe the output and price effects that influence the profit-maximising decision faced by a firm in an oligopoly market. How does this differ from output and price effects in a monopoly market? 5. Nike and Adidas (athletic shoe companies) are considering whether or not to advertise during the next soccer World Cup. Devise a simple prisoners’ dilemma game to demonstrate the strategic considerations that are relevant to this decision. Does the repeated game scenario differ from a single period game? Is it possible that a repeated game (without collusive agreements) could lead to an outcome that is better than a single period game? Explain the circumstances in which this may be true.
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2 6. Two discount superstores (Ultimate Saver and SuperDuper Saver) in a growing urban area are interested in expanding their market share. Both are interested in expanding the size of their stores and parking lots to accommodate potential growth in their customer base. The following game depicts the strategic outcomes that result from the game. Growth-related profits of the two discount superstores under two scenarios are shown in the table. a. What are growth related profits for Ultimate Saver if both stores follow a dominant strategy? b. What are growth related profits for SuperDuper Saver if both stores follow a dominant strategy? c. If the owners of Ultimate Saver and SuperDuper Saver meet for a friendly game of golf one afternoon and happen to discuss a strategy to optimise their growth-related profits, what strategy should they agree to? How would they enforce this agreement? If the collusive agreement was enforceable, how would the wellbeing of society be impacted by the agreement? 7. Graph and calculate the deadweight loss due to profit-maximising monopoly pricing under the following conditions. The price charged for goods produced is $10. The intersection of the marginal revenue and marginal cost curves occurs where output is 100 units and marginal revenue is $5. The socially efficient level of production is 110 units. The demand curve is linear and downward-sloping and the marginal cost curve is linear and upward-sloping.
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