Competitive Firms and Zero Accounting Profits

Replace this text with your response to the following in 75–150 words (1–2 paragraphs) and be sure to reference at least one scholarly source to support your answer: Using the definition and characteristics of perfectly competitive industries, explain why—in the long run—firms earn zero economic profits. Does this mean that competitive firms earn zero accounting profits?

Profit Maximizing

Replace this text with your response to the following in 75–150 words (1–2 paragraphs), including the table, and, besides referring to your table to defend your answers, be sure to reference at least one scholarly source related to profit-maximizing rules for competitive firms to support your response: Joe’s Widget Factory operates in a perfectly competitive industry. Joe’s fixed and variable costs are given in the table below. He is a price taker and can sell as many widgets as he produces for $10 each. Complete the following table and respond to the questions:
a. What is the profit-maximizing (or loss-minimizing) level of output in the short run?
b. What is the profit-maximizing level of output in the long run?
c. What are the shut-down prices in the short run and long run?
Widgets Produced Fixed Costs Variable Costs Total Costs Average Variable Cost Average Total Cost Marginal Cost Price
= MR Profits
0 25 0 10
1 25 8 10
2 25 15 10
3 25 23 10
4 25 32 10
5 25 42 10
6 25 53 10
7 25 65 10
8 25 78 10
9 25 92 10

Natural and Other Monopolies

Replace this text with your response to the following in 75–150 words (1–2 paragraphs) and be sure to reference at least one scholarly source to support your answer: What distinguishes a natural monopoly from other monopolies? What are the pros and cons of regulating natural monopolies? Does your answer differ depending on the specific product or industry being regulated?

Monopolies: Price, Output, and Profits

Replace this text with your response to the following in 150–225 words (2–3 paragraphs) and be sure to reference at least one scholarly source to support your answer: Assume Acme Corporation is a typical monopoly:
• If the economy moves into a recession and the demand for Acme’s product falls, describe the impact of the recession on equilibrium price, output, and profits.
• Based on your answer, comment on the following statement, indicating whether you agree with it: “A monopolist can charge whatever price it wants.”

Barriers to Entry for Monopolies

Replace this text with your response to the following in 150–225 words (2–3 paragraphs) and be sure to reference at least one scholarly source to support your answer: Identify three or four barriers to entry that protect monopolists. Find a specific example of a company that uses each of the barriers that you identified to protect its monopoly status and explain how it uses the barriers. To what extent do you expect the barriers to persist over time? What might cause them to be mitigated or eliminated?

Regulated Companies

Replace this text with your response to the following in 150–225 words (2–3 paragraphs) and be sure to reference at least one scholarly source to support your answer: Consider a local public utility, such as the water utility or scavenger company, that is regulated:
a. What might happen if the company was not regulated?
b. To what extent does regulation lead to equilibrium price and output levels that are consistent with production and allocation efficiencies?
c. Do you think the local community would be better served if the industry was no longer regulated and entry was available to any other company wanting to serve the community?

Oligopolies

Replace this text with your response to the following in 75–150 words (1–2 paragraphs) and be sure to reference at least one scholarly source to support your answer: What are the key differentiating characteristics of a market characterized by oligopoly versus monopolistic competition? Provide two or more specific examples of each type of industry and defend your assignment of the industry to monopolistic competition or oligopoly.

Monopolistic Competition Model

Replace this text with your response to the following in 75–150 words (1–2 paragraphs) and be sure to reference at least one scholarly source to support your answer: What makes the monopolistic competition model different from the monopoly model? Explain how the differences affect short- and long-run equilibrium.

Price and Nonprice Competition

Replace this text with your response to the following in 75–150 words (1–2 paragraphs) and be sure to reference at least one scholarly source to support your answer: Discuss the use of price and nonprice competition in monopolistic competition and oligopoly. In your response, include a real-world example of a company in each market structure that uses nonprice competition. Also, discuss how nonprice competition affects equilibrium price and output.

Payoff Matrix

Replace this text with your response to the following in 150–225 words (2–3 paragraphs) and be sure to reference at least one scholarly source to support your answer: Use the following Payoff Matrix for Company A and Company B, the only two companies that produce widgets, to answer the following questions:
a. What is the expected outcome of this one-time (not repeated) game? Defend your answer.
b. How might your answer change if the game is repeated indefinitely?
c. To what extent does this example illustrate why firms in some concentrated oligopolies exhibit cooperative or collusive behavior, even though they don’t explicitly collude?

Company B Lowers Price  Company B Does Not Lower Price

Company A Lowers Price Company B’s Payoff: $100
Company A’s Payoff: $100 Company B’s Payoff: -$100
Company A’s Payoff: $1,000
Company A Does Not Lower Price Company B’s Payoff: $1,000
Company A’s Payoff: -$100 Company B’s Payoff: $500
Company A’s Payoff: $500

Price and Nonprice Competition

Replace this text with your response to the following in 150–225 words (2–3 paragraphs) and be sure to reference at least one scholarly source to support your answer: Examine at least 2 benefits to companies implementing corporate social responsibility (CSR) and shared-value strategies. Include at least 2 examples of companies that have adopted CSR or shared value and discuss how they benefited from them.

References

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Include appropriately formatted references to scholarly sources to support the statements made in your report. Please refer to the Academic Writing Expectations Checklist for more information.