Question
Answer the following, providing a graphical illustration along with your answer where necessary: What is the profit maximising condition in a market with perfect competition?
Answer the following, providing a graphical illustration along with your answer where necessary:
- What is the profit maximising condition in a market with perfect competition?
- Explain what is meant by abnormal profit? What is the adjustment process from short-run abnormal profit to long-run equilibrium in a perfectly competitive market?
- Please find below Pricing options for firm A and B, along with individual payoffs (Firm A's payoff/Firm B's payoff)
Firm B Firm A
Price 2 Price 1 Price 2 20,000/20,000 10,000/24,000 Price 1 24,000/10,000 12,000/12,000
Assume you are the pricing manager at Firm A;
- What is your payoff for a 'maximin' strategy?
- What is your payoff for a 'maximax' strategy?
- Does a dominant strategy exist within this prisoners' dilemma?
CRITERIA
Q4) a) Explain the profit maximisation condition, along with providing a graphical representation and rationale
b) A clear explanation along with a graphical representation
c) i) Explain what is a maximin strategy, apply it in the context of this problem, and provide a clear solution
ii) Explain what is a maximax strategy, apply it in the context of this problem, and provide a clear solution
iii) Clearly state if there is a dominant strategy, along with explaining what a dominant strategy is
Answer the following, providing a graphical illustration along with your answer where necessary:
Assume you are the pricing manager at Firm A;
CRITERIA Q4) a) Explain the profit maximisation condition, along with providing a graphical representation and rationale b) A clear explanation along with a graphical representation c) i) Explain what is a maximin strategy, apply it in the context of this problem, and provide a clear solution ii) Explain what is a maximax strategy, apply it in the context of this problem, and provide a clear solution iii) Clearly state if there is a dominant strategy, along with explaining what a dominant strategy is |
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