Suppose the market for smartphones in Australia is oligopolistic with three firms

owning the entire market: Apple, Samsung and Google.

(a) Suppose all the products are unbranded (homogeneous) and all three firms have

similar cost functions. What would be

the best outcome for consumers in this market

and what is the best outcome for the three oligopolists

?

Which one is the efficient

outcome?

(b)

Suppose Apple can differentiate its smartphone by using a different operating

system than the other two firms. Th

is would increase the marginal cost of Apple to a

point above the other two firms. How would your answers to part (a) change?

(c)

Suppose all three firms have different cost functions and heterogeneous

products. What would be the predicted outcome in this

case?

Country A is currently experiencing a balanced budget in a normal cycle. The

government in country A is in charge of undertaking different policies to prevent a

predictable recession in future.

(a) Suppose the

government offers a stimulus package to prevent the recession

.

Describe how this stimulus package could prevent the recession and would it

necessarily work well?

(b)

Now suppose there is a

C

ountry B

that trades with Country A. In particular,

Country A imports some products from Country B

. What would be the effects on

trade between the two countries as a result of the policy in part (a)

?

(c)

How would the unemployment in Country A change due to the policy in part (a)

?