Amy Sullo -MT445 Unit_5_Assignment
Amy Sullo -MT445 Unit_5_Assignment
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Date Created: 11/13/15
MT445 Managerial Economics KAPlLAN Unlt 5 ASSIgnment UNIVERSITY Student Name Amy Sullo Please answer the following questions Submit as a Microsoft Word document to the Dropbox when completed 1 Do the firms in an oligopoly act independently or interdependently Explain your answer The firms in an oligopoly act interdependently with each other They do this because the production and output of the firms are based on the events and actions that are taken by the competitors and will have influences on each other 2 A monopolistically competitive firm has the following demand and cost structure in the short run Output Price FC VC TC T R ProfitLoss 0 90 90 0 90 O 90 1 80 90 40 130 80 50 2 7O 90 80 1 7O 1 40 3O 3 60 90 140 230 180 50 4 50 90 220 310 200 110 5 4O 90 320 410 200 210 6 3O 90 440 530 180 350 7 2O 90 580 670 140 530 a Complete the table b What level of output maximizes profit or minimizes loss The level of output that would maximum profit would be level 2 and would also be minimal loss at 30 0 Should this firm operate or shut down in the short run Why I think the firm should operate at level 2 because this is where they have the least losses In the short run they might be able to lower their variable cost which will decrease their losses MT445 Managerial Economics 3 Suppose that WalWorld and Tarbo are independently deciding whether to implement a new bar code technology It is less costly for their suppliers to use one system and the following payoff matrix shows the profits per year for each company resulting from the interaction of their strategies inn in rm V Av 39 inn warn Exismg bai en s ms 54 on A n V A m5 5 lion A Emmi quot Tnibvoem i Av Tamemas billion V 1quot 7 billion inn warn 2 39 39 inn warn Ken39an node ME 53 m r 1 m5 E W x teobnologir V 39 Tnibo mom r A Tnibo 2311534 A 7 billion ri V 7 billion a Briefly explain whether WalWorld has a dominant strategy WalWorld does not have a dominant strategy because if both were to implement a new bar code technology Tarbo would earn 2billion more than WalWorld b Briefly explain whether Tarbo has a dominant strategy Tarbo does not have a dominant strategy because if they both implement a new bar code technology WalWorld would beat Tarbo in profits in 3 if the categories listed above c Briefly explain whether there is a Nash equilibrium in this game According to Hubbard amp O39Brien Nash equilibrium is a situation in which each firm chooses the best strategy given the strategies chosen by other firms In this situation there is a nash equilibrium if both Tarbo and WalWorld decide to use the existing barcode technology MT445 Managerial Economics Reference Hubbard R G amp O39Brien A P 2010 Economics Vol 3rd Edition Upper Saddle River Directions for Submitting your Assignment Complete your assignment in this Microsoft Word document and save it as Username MT445AssignmentUnitdoc ExampleTAllenMT445AssignmentUnit5doc Submit your le by selecting the Unit 5 Assignment Dropbox by the end of Unit 5
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