WU Micro Economics Perfectly Competitive Market Questions

Micro Exam 2 Essay Questions
Question 1
Listen to (or review) the podcast on Mattresses located here:
https://www.npr.org/templates/transcript/transcript.php?storyId=676543180
1. What is it about this industry that indicates it could be monopolistically competitive? In
your answer you MUST include the characteristics of a monopolistically competitive
market (sellers, buyers, product, ease of entry/exit).
2. Suppose you were the president of Mattress Firm and you wanted to figure out a way to
use the law to limit competition in order to maintain higher market share and reduce
competition. What might you do (hint read this: https://www.capitalism.com/sixarguments-government-regulations) and what arguments might you make to try to
accomplish this?
Question 2
Agricultural products such as potatoes are often used as an example of a good that is sold in a
perfectly competitive market.
1. Using the definition of a perfectly competitive market and describe whether potato
production in general fits the important elements of this definition.
2. After you do the first part of this question, Google the term /tato cartel. escribe
the kind of market structure that the potato cartel created using what you learned from
Google as well as from the article/video linked below. Be sure to defend your choice by
using price, quantity, # of sellers, etc. that you learned from your reading.
https://csunshinetoday.csun.edu/csun-leaders/potato-cartel-forced-americans-to-payhigher-prices-for-their-fries/
3. How does what you learned about potatoes relate to what you learned about oil
production and OPEC (the oil cartel) in terms of the goals of cartels regarding
price/quantity/revenue?
Question 3
First, watch this video. https://www.youtube.com/watch?v=7FbkwrhW_0I
Pay special attention from minute 4:00 onward. Make sure to watch it ALL THE WAY TO THE
END when Sarah describes her decision.
Use this EXACT SAME Game Theory Matrix to answer the questions (print it out if you need to).
You will not be able to upload this matrix into MindTap, but you MUST HAVE IT COMPLETE
because I am going to ask you what numbers go in place of the letters shown below.
1.
Insert the payoffs for each of the triangles (they are given in the video, you just have to
listen closely starting at around minute 4:00) A:___, B:___, C:___, D:___, W:___, X:___, Y:___,
Z:____
2.
Based on what you found, is there a dominant strategy and if so, what is it?
3.
At the end of the video, you learn some important information about Sarahàstrategy
given that this is not a one-off game. What strategy did she adopt (refer to your chapter and
use the proper term)?

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