Why don’t you believe the firms would be likely to do that?

This assignment consists of three separate parts. For full credit please respond to each part, possible points are listed in each.
Remember given the change in schedule we talked about last class the due date is extended, but there is no grace period for late submissions for this assignment.


Part One
In response to the five questions fill in the correct information about each market type. (2 points for each question, total 40 points possible)
Perfect Competiti Monopolistic Competition Monopoly Oligopoly

How many firms are in this market?

What type of product is sold in this market type?

Are there significant barriers to entry?

If so, name at least least two possibilities.

Can firms in this market structure earn economic profits in the long run?

Part Two
Based on the graph above answer the following questions. supply and demand diagram
Is this a perfectly competitive or a monopolistically competitive firm that is shown? (2 points)
Explain how you know? (3 points)
Does this graph show a short run or long run situation? (2 points)
Explain how you know? (3 points)
What is likely to happen in this market given the existing price and quantity equilibrium (2 points) and why? (3 points)


Part Three
This question looks at the payoff for advertising or not for Apple and Samsung.
Given the expected returns from each choice answer the following questions. (5 points possible for each question, 20 points total)
Samsung
Advertise Don’t Advertise
Apple Advertise 40/40 20/45
Don’t 45/20 28/28
Advertise
What is the Nash Equilibrium for this situation?
Is there an incentive for each firm to mislead the other about their intentions to advertise or not?
Why don’t you believe the firms would be likely to do that?
How does the Stackelberg Equilibrium we discussed in class apply to one of these company’s behavior?

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