曼昆经济学原理课后答案Chapter16-21.doc

Chapter 16 Problems and Applications 1. a. Tap water is a perfectly competitive market because there are many taps and the product does not differ across sellers. b. Bottled water is a monopolistically competitive market. There are many sellers of bottled water, but each firm tries to differentiate its own brand from the rest. c. The cola market is an oligopoly. There are only a few firms that control a large portion of the market. d. The beer market is an oligopoly. There are only a few firms that control a large portion of the market. 2. a. OPEC members were trying to reach an agreement to cut production so they could raise the price. b. They were unable to agree on cutting production because each country has an incentive to cheat on any agreement. The turmoil is a decline in the price of oil because of increased production. c. OPEC would like Norway and Britain to join their cartel so that they could act as a monopoly. 3. a. If there were many suppliers of diamonds, price would equal marginal cost ($1,000), so the quantity would be 12,000. b. With only one supplier of diamonds, quantity would be set where marginal cost equals marginal revenue. The following table derives marginal revenue: Price (thousands of dollars) Quantity (thousands) Total Revenue (millions of dollars) Marginal Revenue (millions of dollars) 8 5 40 ---- 7 6 42 2 6 7 42 0 5 8 40 –2 4 9 36 –4 3 10 30 –6 2 11 22 –8 1 12 12 –10 With marginal cost of $1,000 per diamond, or $1 million per thousand diamonds, the monopoly will maximize profits at a price of $7,000 and a quantity of 6,000. Additional production beyond this point would lead to a situation where marginal revenue is lower than marginal cost. c. If Russia and South Africa formed a cartel, they would set price and quantity like a monopolist, so the price would be $7,000 and the quantity would be 6,000. If they split the market evenly, they would share total revenue of $42 million and costs of $6 million, for a total profit of