ECO $2200-$ Resitation Exam

Fall $2023$ Sections $1$ and $4$

Discuss the relationship betweenship between the marginal cost and the supply functions in the short and the long run. If you assume a firm to fire $90\%$ of workers to substitute them with robots and if the profit rate would increase by $250\%,$ how would this affect the marginal cost curve? Draw and discuss.

In a monopolistically competitive market, the government applies a specific tax of $$1$ per unit of output. What happens to the profit of a typical firm in this market? Draw a carefully labeled graph showing this effect. Does the number of firms in the market change? If yes, then what happens to the profits of remaining firms? Show this effect on your graph.

Describe the mathematical way to state the monopoly power of a company in a market. Explain how the method you mention measures the monopoly power. Assume you need to find out the monopoly power of companies in a major market. Data of what kind of variables would be useful for that calculation? in which sectors you expect to find companies with higher monopoly power in your country?

Assume a fast food restautant, which acts as a monopoly in a city, divides the city into two different markets. One of them is the market of the city center, people come to work, and there aren't many residential buildings, instead there are offices and workplaces, the other market is in the residential neighbourhood where people live with their families. In which way you would expect demand in both markets be different both in terms of its size and elasticity? Explain your answer. Show graphically and explain how the restaurant will decide on the price of an average meal as well the the quantity of that average meal supplied to two different markets.

For the game shown before discuss how the result will change when the game is one time as a simultanous, one time as a sequential and repreated as a simultanous game. Comment on to what extend do you think this kind of a market can be used to model oligopolistics markets of your country, or a country you choose. Explain your opinion.

CHOOSING OUTPUT

$\backslash$table$[[$Blank Cell,Blank Cell,FIRM $2,$FIRM $2,$FIRM $2],[$Blank Cell,Blank Cell,$7\mathrm{.}5,10,15],[$Firm $1,7\mathrm{.}5,112\mathrm{.}50,112\mathrm{.}50,93\mathrm{.}75,125,56\mathrm{.}25,112\mathrm{.}50$