Unit 8 Assignment: Oligopoly and Monopolistic Competition and Product Differentiation
Name: -
Course Number: -
Section Number: -
Unit Number: - 8
Date: -
Problem
Dr. Fine and Dr. Feelgood are the only two medical doctors offering immediate walk-in medical services in the town of Springfield. That is, they operate in a duopoly. Each doctor can charge either a high price or a low price for a standard medical visit. The accompanying matrix shows their payoffs, in profits per patient (in dollars), for any choice that the two doctors can make.
FIRST Period
Payoffs
SECOND Period
TOTAL Payoffs
Charges
(high or low)
Fine
Feelgood
Discuss whether this statement is true, false or ambiguous with respect to each of the criteria listed under a, b, c, and d. Justify your answers.
a. The price charged to consumers
b. The average total cost of production
c. The efficiency of the market outcome
d. The typical firm’s profit in the long run
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References:
Microeconomics: Unit 8 Assignment: Game Theory and Perfect Competition and monopolistic competition in the Long run
Content (15 points)
Points Possible
Points Earned
Game TheoryCorrectly calculated the non-cooperative Nash equilibrium for one-shot game.
3
Two-shot game with two strategies: “always charge the low price” or “tit for tat”.
Find payoffs to Dr. Fine when:
4
Considering the following statement: “In the long run, there is no difference between monopolistic competition and perfect competition.” discussed whether the following would be determined to be true, false, or ambiguous (justify your answers):
8
Analysis (6 points)
Work demonstrates synthesis of concepts, research, and experience
2
Work demonstrates the student’s ability to tie relevant information to real-life applications.
Analysis exceeds basic comprehension to demonstrate higher-order thinking.
Writing (4 points)
Correct use of APA 6th edition format, all sources used to support the paper are referenced
Sentences are clear, concise, and direct; tone is appropriate, spelling, grammar, and punctuation are correct.
Total
25