Select TWO of the following three case studies from Principles of Microeconomics.

Review each case study and prepare a 5- to 7-page response to each case study (not counting a cover page and a references page) to the questions that follow. 

Submit your analysis in APA format to your Instructor. 

Case 1: “Advertising and the Price of Eyeglasses” on pp. 340–341 

This case addresses a question about whether society is wasting the resources devoted to advertising. Does advertising serve a valuable purpose, or is it just a way that business firms manipulate people’s tastes? Is advertising more psychological than informational? 

Use the breakfast cereal Frosted Flakes as the topic for your response to the following questions. Provide specific examples to support your answers. 

• How is it possible for Kellog’s to offer Frosted Flakes for prices ranging from $3.50 to $4.00 per box, when competitors such as General Mills and Ralston’s sell the same-sized box in the range of $2.10 to $2.50? 

• Is a frosted flake a frosted flake, or do real product differences exist? 

• Does a registered trademark such as Tony the Tiger really add any informational value to the product, or is it more psychological in nature? Is this type of advertising the primary basis for such price differences of frosted flake brands? 

• Does one of the brand names that is more advertised denote a better quality of frosted flake for any reason? 

• How does branding and advertising fit into the overall market structure of monopolistic competition? If your employer fits into the market structure of monopolistic competition, why (or why not) does your company advertise?  

Case 2: “OPEC and the World Oil Market” on p. 356 

Answer the following questions. Provide specific examples to support your answers. 

• How many countries are in this cartel? Do you think the attributes of OPEC qualify it as an oligopolistic market structure? Why or why not? 

• Using background such as a Nash equilibrium and the Prisoner’s Dilemma, how would you explain OPEC countries that frequently “cheat” on OPEC agreements to reduce oil production in order to keep oil prices high, and then the cheater increases production (at a lower price) in order to gain more of the profits? 

• Do you believe that oil prices today are being driven more by forces of market supply and demand, or by OPEC agreements?  

• What measure do you think OPEC could take to ensure member adherence to OPEC member-country agreements? 

• Is it legal in the USA to form a cartel like this? Why or why not?  

• If member countries have the capacity to stray from agreements, do you believe this is an oligopoly, as contrasted to all member countries adhering to the agreements? Why or why not? If all members always adhere to the OPEC agreements, is this a monopoly or is it still considered an oligopoly? Why? Do you think expanding oil production in the USA, to include possible increases in the supply from the pipeline coming from Canada, bears on the answer as to whether OPEC is a monopoly or an oligopoly?  

Case 3: “The Microsoft Case” on p. 363 

Answer the following questions. Provide specific examples to support your answers.

• What was the basic charge against Microsoft by the government?  

• Why do you think, in the end, the government announced it did not want a breakup of the company and just wanted to settle the case quickly? 

• What kind of agreement is illegal for businesses to make?  

• If Altria (a major corporation with control over Philip Morris, Miller Brewing, and Kraft Foods) requires large chain food stores such as Kroger or Food Lion to purchase required quantities of products from each of these (now three separate) companies on the basis that it essentially just one large, combined supplier purchase, do you think this would be legal or illegal? Why or why not?

• Why are the antitrust laws controversial?  

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