Sofia, a political science student, thinks that the government should intervene to revive declining industries like video stores and print newspapers. The government, shereasons, can resolve the coordination problem of getting the agents in these markets to trade.Do you agree with her? Explain your answer.OA. No, these industries are declining not because of coordination problems but, rather, because of falling demand.OB. Yes, the coordination problems of these industries suggest that the invisible hand is failing, so government intervention would revive these industries.OC. Yes, government intervention is necessary to generate more buyers for these industries, thus coordinatingbuyers with existing sellers.OD. No, these declining industries are plagued by coordination problems, butgovernment intervention is neverthe answer.

Coordination Problem:A coordination problem refers to a situation where individuals or agents in a…

Sofia, a political science student, thinks that the government should in reasons, can resolve the coordination problem of getting the agents im Do you agree with her? Explain your answer. OA. No, these industries are declining not because of coordinations OB. Yes, the coordination problems of these industries suggest that OC. Yes, government intervention is necessary to generate more tr OD. No, these declining industries are plagued by coordination pro

Sofia, a political science student, thinks that the government should in reasons, can resolve the coordination problem of getting the agents im Do you agree with her? Explain your answer. OA. No, these industries are declining not because of coordinations OB. Yes, the coordination problems of these industries suggest that OC. Yes, government intervention is necessary to generate more tr OD. No, these declining industries are plagued by coordination pro

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 20P: May and Raj me the only two growers who provide organically grown corn to a local grocery store....

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The tables (below) show the willingness to pay by three (competitive) consumers for additional units of some good, and the marginal costs of three (competitive) firms that produce that good. a) Compute the competitive equilibrium quantity and price for this market. Also, compute each consumer's surplus and each firm's profits. b) Now suppose that you have access to the same technology (and competitive input markets) as that of Firm 3. Entering the market (that is, launching a fourth firm) means a fixed (yes, sunk too) cost of $10. Would you decide to enter? (Entry has effects on the market, of course.) c) With the same data, suppose that all three firms merge. That is, now a single corporation controls (and decides on output for) all three firms (now, plants of one single firm). Obtain the output (or, equivalently, the price) that this monopolistic corporation will choose, and evaluate the consequences for the consumers (that is, the effect on the consumer surplus) and for the profits…
Now assume that both firms are in the market and they choose quantities to supply. Assume also that, in equilibrium, firm 1 supplies 1/4 of the market, while firm 2 supplies the remaining 3/4. Then, in equilibrium, Question 2 options: Firm 1 charges a larger (percentage) mark-up over its costs than firm 2. Firm 1's mark-up is smaller than the mark-up it would charge if it was a monopoly. Firm 1 charges a smaller (percentage) mark-up over its costs than firm 2. However, Firm 1's mark-up is larger than the mark-up it would charge if it was a monopoly. Firm 1 charges a larger (percentage) mark-up over its costs than firm 2. Firm 1's mark-up is larger than the mark-up it would charge if it was a monopoly. Firm 1 and Firm 2 charge the same mark-up (in percent). This mark-up is smaller than the mark-up they would charge as monopolists. Firm 1 and Firm 2 charge the same mark-up (in percent).…
Let us take a car market where we know(but the buyers don`t) that 40 percent of the cars are bad cars(lemons), the reservation price for demanders is 12 (thousand) for good cars and 10 (thousand) for bad cars, while the reservation price for the car suppliers is 10 thousand for a good car, and 8 thousand if it is a bad car. a-Discuss what the situation would be like if everybody could observe if a car is a good car, or a bad car(lemon)- how would the market reach equilibrium? b-Discuss what the situation would be like if only sellers knew the true character of the car( good or bad) whereas the buyers only know the average car quality? c-Why would the second situation create a partial unraveling of the market? What are the only cars that can be bought and sold? d-Prove why the in question 3b equilibrium is a suboptimal outcome? e-Why does a similar situation in the labor market result in a signaling equilibrium? Sketch your way of thinking, and show in which case there would be a…
May and Raj me the only two growers who provide organically grown corn to a local grocery store. They know that if they cooperated and produced less corn, they could raise the price of the com. If they work independently, they will each earn 100. If they decide to work together and both lower their output, they call each earn 150. If one person lowers output and the other does not, the person who lowers output will earn $1 and the other person will capture the entire market and will earn 200. Table 10.6 represents the choices available to Mary and Raj. What is the best choice for Raj if he is sole that Mary will cooperate? If Mary thinks Raj will cheat, what should Mary do and why? What is the prisoners dilemma result? What is the preferred choice if they could ensure cooperation? A = Work independently; B = Cooperate and Lower Output. (Each results entry lists Rajs earnings first, and Marys earnings second.)
Q8. What role does the U.S. government play with respect to market competition? a.) It preserves competition by regulating prices and intervening in the price and output decisions of businesses. b.) It preserves competition by maintaining abundant government-owned firms to ensure consumer-friendly pricing. c.) It polices anticompetitive behavior and prohibits contracts that restrict competition.
You stop by a crafts fair and you notice consumershaggling with vendors over prices. What does thistell you about the competitiveness of this market?Suppose you plan to go to a farmers’ market next.Do you expect to find more or less haggling at thismarket than you did at the crafts fair? Why?
Gasoline "prices at the pump" go up and down, and Oil "costs per barrel" go up or down, but they do so at different rates and even in opposite directions sometimes. We want to think that demand and supply control prices where the cost of crude oil is set by the same economic conditions that determine the gas price. What are these mismatched trends (graphs of each are shown in the following web links) telling us about how demand and supply work in the market? http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EER_EPMRU_PF4_Y35NY_DPG&f=A http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RWTC&f=A
In the rural area of a large agricultural-based economy in which corn is the staple food, there are many small farmers, each of them planting corns in a small piece of land using the same plantation method. Upon harvesting, they will deliver their corns to the city and sell them to the large population of customers in the city. The corn farmers do not have any bargaining power in determining the price of their corns. The corn price is determined by the market demand and supply, but each farmer will have no problem selling all their corns at the market equilibrium price. Q: There is no incentive for the corn farmers to carry out innovation in this corn market. Do you agree? Explain.
In the rural area of a large agricultural-based economy in which corn is the staple food, there are many small farmers, each of them planting corns in a small piece of land using the same plantation method. Upon harvesting, they will deliver their corns to the city and sell them to the large population of customers in the city. The corn farmers do not have any bargaining power in determining the price of their corns. The corn price is determined by the market demand and supply, but each farmer will have no problem selling all their corns at the market equilibrium price. (a) Examine the market structure of the corn market. Draw a suitable corn market and also an individual farmer’s demand and supply diagrams to illustrate the initial situation in the corn market where all farmers are earning normal profit. Your diagrams should reflect the correct shape for the corn market demand and supply curves based on your understanding of the price elasticity of demand and supply of corns. (b) It…
In the rural area of a large agricultural-based economy in which corn is the staple food, there are many small farmers, each of them planting corns in a small piece of land using the same plantation method. Upon harvesting, they will deliver their corns to the city and sell them to the large population of customers in the city. The corn farmers do not have any bargaining power in determining the price of their corns. The corn price is determined by the market demand and supply, but each farmer will have no problem selling all their corns at the market equilibrium price. (a) Examine the market structure of the corn market. Draw a suitable corn market and also an individual farmer’s demand and supply diagrams to illustrate the initial situation in the corn market where all farmers are earning normal profit. Your diagrams should reflect the correct shape for the corn market demand and supply curves based on your understanding of the price elasticity of demand and supply of corns.
In the rural area of a large agricultural-based economy in which corn is the staple food, there are many small farmers, each of them planting corns in a small piece of land using the same plantation method. Upon harvesting, they will deliver their corns to the city and sell them to the large population of customers in the city. The corn farmers do not have any bargaining power in determining the price of their corns. The corn price is determined by the market demand and supply, but each farmer will have no problem selling all their corns at the market equilibrium price. (a) Examine the market structure of the corn market. Draw a suitable corn market and also an individual farmer’s demand and supply diagrams to illustrate the initial situation in the corn market where all farmers are earning normal profit. Your diagrams should reflect the correct shape for the corn market demand and supply curves based on your understanding of the price elasticity of demand and supply of corns.(b) It is…
In the rural area of a large agricultural-based economy in which corn is the staple food, there are many small farmers, each of them planting corns in a small piece of land using the same plantation method. Upon harvesting, they will deliver their corns to the city and sell them to the large population of customers in the city. The corn farmers do not have any bargaining power in determining the price of their corns. The corn price is determined by the market demand and supply, but each farmer will have no problem selling all their corns at the market equilibrium price. Q1) It is discovered that consuming corn is beneficial to health. Appraise the short run and the long run effects on the corn market as well as the individual corn farmer following this discovery. (Your answer should not be more than 400 words). Q2) There is no incentive for the corn farmers to carry out innovation in this corn market. Do you agree? Explain. (Your answer should not be more than 300 words).