ECON 207 MICROECONOMIC ANALYSIS RESIT
微观经济代写 In 2000, two friends Juliet and Francesca, both started small specialist IT companies providing enhanced security products for…
Candidates should answer THREE questions including ONE question from SECTION A and ONE question from SECTION B.
SECTION A 微观经济代写
- In 2000, two friends Juliet and Francesca, both started small specialist IT companies providing enhanced security products for business. They were the only two such companies in this market. Over the next decade, they competed over quantities. From 2010 onwards, it became apparent that the business the friends were operating in was a growth market. While Francesca did not want to expand her operation in any way, Juliet adopted an aggressive strategy and opened more retail outlets and also invested heavily in an online operation
(a) Explain the nature of the competition the friends engaged in when they first started their companies.
(b) How did the production decisions of the two firms change when Francesca expanded her operation?
(c) Following Francesca’s expansion all of her customers, as well as Juliet’s customers, said that they were more satisfied with the two firms as suppliers than they were before Francesca’s expansion. Why might this be the case? 微观经济代写
- Assume that a mobile telephony company that occupies a monopoly position in the ultra high speed telephony market supplies its services to only two consumers; Boris and Matt. Assume that both Boris and Matt have identical demand curves. Initially, the company has a simple charging structure. It charges $30 for one day’s use; this includes rental of phones, calls, texts, internet use, multi-media etc. The marginal costs of these services is $10.
(a) The CEO of the company asks you whether the charging policy in use is optimal, or whether the company should consider lowering the daily usage price and compensating for this loss in revenue by charging a fix fee to use the service. What would you recommend?
(b) How would your pricing recommendation change if Boris and Matt do not have the same demand functions?
SECTION B 微观经济代写
- (a) Find the Nash equilibrium in the simultaneous-move game below.
(b) The timing of the game changes and the game now is a Stackelberg duopoly where Firm B is the leader and gets to commit to a higher level of output before its rival. Find the subgame perfect Nash equilibrium. Solve by backward induction drawing the corresponding tree. Has the outcome changed from question (a)?
- Explain the problem that can arise due to asymmetric information because of a hidden characteristic. Provide an example. How can this problem be solved?
