Questions from Microeconomics


Q: Defendo has decided to introduce a revolutionary video game. As the

Defendo has decided to introduce a revolutionary video game. As the first firm in the market, it will have a monopoly position for at least some time. In deciding what type of manufacturing plant to b...

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Q: In many oligopolistic industries, the same firms compete over a long

In many oligopolistic industries, the same firms compete over a long period of time, setting prices and observing each other’s behavior repeatedly. Given the large number of repetitions, why don’t col...

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Q: Many industries are often plagued by overcapacity: Firms simultaneously invest in

Many industries are often plagued by overcapacity: Firms simultaneously invest in capacity expansion, so that total capacity far exceeds demand. This happens not only in industries in which demand is...

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Q: Two computer firms, A and B, are planning to market

Two computer firms, A and B, are planning to market network systems for office information management. Each firm can develop either a fast, high-quality system (High), or a slower, low-quality system...

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Q: Consider a game in which the prisoners’ dilemma is repeated 10 times

Consider a game in which the prisoners’ dilemma is repeated 10 times and both players are rational and fully informed. Is a tit-for-tat strategy optimal in this case? Under what conditions would such...

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Q: Suppose you and your competitor are playing the pricing game shown in

Suppose you and your competitor are playing the pricing game shown in Table 13.8. Both of you must announce your prices at the same time. Can you improve your outcome by promising your competitor that...

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Q: What is meant by “first-mover advantage”? Give an

What is meant by “first-mover advantage”? Give an example of a gaming situation with a first-mover advantage.

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Q: What is a “strategic move”? How can the development of

What is a “strategic move”? How can the development of a certain kind of reputation be a strategic move?

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Q: Many retail video stores offer two alternative plans for renting films:

Many retail video stores offer two alternative plans for renting films: • A two-part tariff: Pay an annual membership fee (e.g., $40) and then pay a small fee for the daily rental of each film (e.g.,...

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Q: Can the threat of a price war deter entry by potential competitors

Can the threat of a price war deter entry by potential competitors? What actions might a firm take to make this threat credible?

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