Economics with Insight

1. Which of the following will be true for both monopoly and monopolistic competition in the short run? (1) Price is greater than marginal revenue. (2) Price is equal to marginal revenue. (3) Price is equal to marginal cost. (4) Price is equal to average cost. 2. Consider the following matrix which describes the respective strategies and the corresponding pay-offs of firms A and B operating in a duopoly: Which of the following statement(s) is/are true for the above game? Select the correct answer from the codes given below: (a) Firm A has no dominant strategy. (b) Firm B has a dominant strategy. (c) The game has a Nash equilibrium. (d) Neither Firm A nor Firm B has a dominant strategy. Code: (1) (a), (c) (2) (b), (c) (3) (d) Only (4) (a), (b) and (c) 3. In the context of oligopoly, consider the following statements: (a) Cournot’s equilibrium is a Nash equilibrium. (b) Stackelberg equilibrium is a Nash equilibrium. Select the correct ...

Meaning:   Economic integration is a process whereby countries in a geographical region (location) cooperate with one another to reduce or eliminate barriers to the international flow of products, people, or capital. It can be of served forms with different degrees of integration. ACCORDING TO SALVATORE’S “Commercial policy of discriminatively reducing or eliminating trade barriers only among the nations joining together” Note: Therefore it refers to a decision or process whereby two or more countries combine into  a larger economic region by removing discontinuities and discriminations existing along national frontiers, and by establishing certain elements of cooperation between them. ON THE BASICS OF COOPERATION WE HAVE THE FOLLOWING TYPES OF ECONOMIC INTEGRATIONS. 1. P referential trading system/Preferential trade arrangements (PTA). 2. Free trade area (FTA). 3. Customs union (CU). 4. Common market. 5. Economic Union (EU). 1. PREFEREN...