ALL Oligopoly FRQ's
2019 AP Microeconomics Exam (Set 1) answered here
2019 AP Microeconomics Exam (Set 2) answered here
Showing posts with label Oligopoly. Show all posts
Showing posts with label Oligopoly. Show all posts
Thursday, April 30, 2020
Tuesday, November 12, 2019
Oligopoly Cheat Sheet (Updated Nov 12, 2019)
Oligopoly Cheat Sheet
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| Techno Viking got a 5 on his AP Exam |
Monday, November 11, 2019
2019 Micro Set 1, FRQ # 3, Oligopoly
2019 Micro Set 1, FRQ # 3, Oligopoly
1st - Underline Patricks Pie's numbers
and square-in Dee's Pizza
2nd - Do a word chart
a) What actions maximize the combined total profits for Patricks pie and Dee's pizza?
b) Conditional on your answer in part (a), does either Patrick or Dee have an incentive to cheat on this combination of actions that maximize the combined total profits? Explain using numbers from the payoff matrix.
c) Does Patrick have a dominant strategy?
d) Identify the Nash Equilibrium or equilibria actions for this game.
Nash Equilibrium = When neither player has an incentive to change its position
*** If neither player has a dominant strategy
there can be two Nash Equilibria
or
No Nash Equilibria
e) Ignoring anti-trust considerations, suppose that Patrick pays Dees $20 to Stay-Out
i) Redraw the payoff matrix showing how the $20 payment to Dee affects the payoffs.
ii) Identify the Nash Equilibrium
Sunday, November 10, 2019
2019 Micro Set 2, FRQ #3, Oligopoly
2019 Micro Set 2, FRQ #3, Oligopoly
a) Is Jackpot's dominant strategy to close at 6pm or to close at 9pm, or does it have no dominant strategy.
b) Suppose jackpot chooses to close at 6pm and Boulevard chooses no delivery. Is this the profit-maximizing action by Boulevard? Explain using values from pay-off matrix.
c) How much profit will Boulevard earn in the Nash Equilibrium?
Understand that The Nash Equilibrium,, implies that both participants are in their best locations given the other participants choice.
1st - Understand that Jackpot will always close at 6pm = dominate strategy
2nd - Understand that Boulevard will choose to Deliver as that maximizes profit.
Boulevard will Deliver as $30 > $20 - Boulevard's profit is $30 in the Nash Equilibrium
d) Suppose the two companies merge with two locations and the same pay-offs. What strategy would the new company use to maximize its combined profits?
Why?
The payoff with the largest combined profit for two locations.
e)
Friday, December 9, 2016
2009 Microeconomics FRQ #3
1st make a chart
(A) If Red chooses a location south of the city, which location is better for Blue? Explain.
If red goes South, then Blue should go North as $4000 > $1000
(B) Is choosing a location to the South of the city a dominant strategy for Red Shop? Explain.
Red shop has no dominant strategy and neither does Blue. Both are better off doing the opposite of the other's choice.
(C) If the two firms cooperate in choosing locations, where will each firm locate?
If they cooperate they will collude and choose the locations that give off the biggest payoff.
(D) Assume that the South suburb has enacted an incentive package to attract new businesses. Any firm firm that locates south of the city will receive a subsidy of $2000 per day. Redraw the payoff matrix to include the subsidy.
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