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1. _____/15
2. _____/25
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4._____/13
5._____/10
6._____/15
7._____/5
8._____/5
Name: ___________________________
Team: ___________________________
Total: _____/108
Unit IV: Imperfect Competition
Problem Set #4
Integrity Agreement
I, (insert your name here), agree that all of the work in this presentation is my original work. I agree to keep this
work to myself this year and for future years. I understand that if this work is not my own original work or if I share
my original work with others, that I will be sent to my GLC for academic dishonesty.
Digital Signature: type your full name here
1. Define the term and give a real world example. Use numbers and/or graphs in your answer where
applicable.
a. Barriers to Entry (____/3)
b. MR=MC Rule (____/3)
c. Price Discrimination (____/3)
d. Socially Optimal Price (____/3)
e. Fair Return Price (____/3)
2. Practice FRQ
a. FRQ #1 (____/14)
b. FRQ #2 (____/6)
c. FRQ#3 (____/5)
3. Complete the following worksheets:
a. “Regulating Monopolies” (____/5)
b. “A Quick Review of Perfect Competition and Monopoly” (____/5)
c. “Price Discrimination” (_____/5)
d. “Prisoner’s Dilemma” (_____5)
4. Use the chart to complete the following: (____/3)
a. Explain why the MR curve is less than the demand curve for all imperfectly competitive firms.
Use a SPECIFIC numerical example from the chart in your explanation. ( ____/5)
b. On a large graph, PLOT the demand and marginal revenue curves. On a new graph below,
plot the Total Revenue. Use the total revenue test to EXPLAIN the elastic and inelastic range
of the demand curve. Be sure to identify the elastic and inelastic ranges. (____/5)
Price
$10
9
8
7
6
5
Quantity
Demanded
0
1
2
3
4
5
Total Revenue
Marginal Revenue
4
3
2
1
6
7
8
9
5. Complete the following paragraphs:
a. Compare Monopolistic Competition and Perfect Competition. (____/5)
b. Explain Oligopoly. (____/5)
6. Gaxski and Awesomeski are the only two ski resorts on Mt. Econisthebest. Each firm has the option
to price high or price low. The following chart is the payoff matrix for both firms.
Gaxski
High
Low
High
200,150
300,250
Low
150,350
100,200
Awesomeski
a. What is the dominant strategy for Gaxski? Explain. (____/5)
b. What is the dominant strategy for Awesomeski? Explain. (____/5)
c. Assume that this information is available to both firms. Assuming no collusion, how much would
each firm earn? Explain how you got your answer. (____/5)
7. Stamps/Turnitin.com Receipts (____/5)
8. Format (____/5)