Re: Gokhale sample paper 3 discussion

Posted by Homer Simpson on Jun 07, 2014; 12:41pm
URL: http://discussion-forum.276.s1.nabble.com/Gokhale-sample-paper-3-discussion-tp7591759p7591793.html

The rise in government spending will lead to a "rightward shift" for a given P. But since the economy is supply-constrained (AS vertical) the prices will rise accordingly to maintain an equilibrium in long run. In that sense, i am wondering whether i can really call this case an upward shift caused by rise in G.

As for 11, (iii) definitely not - oligopoly has few sellers.

Non-price competition occurs but if i consider the betrand model under oligopoly, its not essential actually. Excess capacity can happen as a deterrence to entry - say stackelburg model with entry deterrence but not in all cases. Thus i think only (iv) is actually "essential"