Econ 315 Exam 3 Study Guide Questions And Answers Graded A+ 2023

Econ 315 Exam 3 Study Guide Questions And Answers Graded A+ 2023 Sweeny model of oligopoly; why does the price become "sticky" Because of kinked demand curve Sweezy model of oligopoly; focus on price elasticity of demand - If firm lowers its price; it has inelastic demand and TR drops - If firm raises its price; it has elastic demand and TR drops No incentive to change price since TR decreases in both cases Conceptual question; effect of change in marginal cost in oligopoly model(s) Sweezy: MC can change without changing profit-maximizing Q; no change in Q = no change in Price (sticky price) Other models: MC goes up and Price goes up Contestable market; general observations - Consumers respond to price changes - All firms have same technology - No sunk costs - If there is profit, firms enter until Profit = ZERO - Firms cannot quickly lower price - Firms produce where MC = P - Firms have no market power - No barriers to entry Finite game with definite end - Collusion not possible - Backward unraveling