tailieunhanh - Bài tập về Kinh tế vĩ mô bằng tiếng Anh - Chương 10

Tham khảo tài liệu 'bài tập về kinh tế vĩ mô bằng tiếng anh - chương 10', kinh tế - quản lý, kinh tế học phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | Chapter 10 Market Power. Monopoly and Monopsony PART III MARKET STRUCTURE AND COMPETITVE STRATEGY CHAPTER 10 MARKET POWER MONOPOLY AND MONOPSONY EXERCISES 1. Will an increase in the demand for a monopolist s product always result in a higher price Explain. Will an increase in the supply facing a monopsonist buyer always result in a lower price Explain. As illustrated in Figure in the textbook an increase in demand need not always result in a higher price. Under the conditions portrayed in Figure the monopolist supplies different quantities at the same price. Similarly an increase in supply facing the monopsonist need not always result in a higher price. Suppose the average expenditure curve shifts from AE1 to AE2 as illustrated in Figure . With the shift in the average expenditure curve the marginal expenditure curve shifts from ME1 to ME2. The ME1 curve intersects the marginal value curve demand curve at Q resulting in a price of P. When the AE curve shifts the ME2 curve intersects the marginal value curve at Q2 resulting in the same price at P. Figure 2. Caterpillar Tractor one of the largest producers of farm machinery in the world has hired you to advise them on pricing policy. One of the things the company would like to know is how much a 5 percent increase in price is likely to reduce sales. What would you need to know to help the company with this problem Explain why these facts are important. As a large producer of farm equipment Caterpillar Tractor has market power and should consider the entire demand curve when choosing prices for its products. As their advisor you should focus on the determination of the elasticity of demand for each product. There are three important factors to be considered. First how similar are the products offered by Caterpillar s competitors If they are close 138 Chapter 10 Market Power. Monopoly and Monopsony substitutes a small increase in price could induce customers to switch to the competition. Secondly .