Economic

A corporate business enterprise is established under a specific legal framework where laws governing the operations and functioning of the enterprise are outlined. The activities of the enterprise are monitored and therefore such an enterprise is recognized by law. This is important due to the fact that legal suits can be filed by the enterprise within the provisions of the law.

15. In pure competition, each extra unit of output that a firm sells will yield a marginal revenue that is ( )

1. Describe two examples of important things that financial planning skills can help you do, and explain why these things are important to you personally. (4-6 sentences. 2.0 points)

Despite the city’s positive response to the coffee shop’s renovation, other businesses in the area have not followed suit in renovating the many decrepit buildings and abandoned lots. How might the presence of an externality be in part the cause of this?

5. Suggest three (3) reasons a monopoly may or may not be efficient in any economy.

Explain how a profit maximizing firm determines its optimal level of output, using marginal revenue and marginal cost as criteria:

1. (10 pts.) Stella Ann Freeman is having a difficult time deciding whether or not to purchase a new car. How would understanding the concept of opportunity costs help her make a decision?

Asian taxes would rise to offset the lost revenue of monies from the factories that have shut down.

In a monopolistically competitive industry, the goods sold, while not perfect substitutes, can be viewed as acceptable substitutes by most people. As a result, if Firm A raised the price of its good substantially, consumers would decrease the quantity demanded from Firm A and would move to other firms selling similar products. As a result, Firm A would sell few units at the new higher price. As the quantity a firm sells falls, so does its percentage of sales in the industry, also

As against his a competitive firm cannot change different prices from different buyers since he faces a perfectly elastic demand at the going market price. If he increases a slights rise in price he will lose the sellers and makes loss. Thus a competitive firm cannot discriminate prices which a monopolist can do.

In a perfect competition substitutes are abundant and to stay competitive one will need to offer the lowest possible price. In monopolistic competition, the differentiation is based on quality and competitive advantage. Substitutes are not as readily available so a consumer will likely decide on the better value that comes with better quality.

Perfect competition is an idealised market structure theory used in economics to show the market under a high degree of competition given certain conditions. This essay aims to outline the assumptions and distinctive features that form the perfectly competitive model and how this model can be used to explain short term and long term behaviour of a perfectly competitive firm aiming to maximise profits and the implications of enhancing these profits further.

8. Compared to a perfectly competitive industry with the same demand and cost curves, a monopoly’s price and output will be which of the following?

This assignment has a maximum total of 100 marks and is worth 10% of your total grade for this course. You should complete it after completing your course work for Units 1 through 5. Answer each question clearly and concisely.

The firm would be unwilling to produce at any point off of its best response curve as profits would suffer the only point both firms can achieve this is at Cournot equilibrium. The profits made under the Cournot model are above perfect competition but below the maximum they could be when collusion between firms exists (see fig4 in appendix) which is what encourages firms to collude. In summary the Cournot model shows how firms set there quantities based off what they think the other firm will do, which is the strategic element in the model (Carlton & Perloff, 2005).