D6) Outline and critically assess the theory of perfect competition. To what extent does the theory provide useful guidance to: (i) business owners, and (ii) government policy makers interested in maximising consumer welfare?
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- 3 a) Start with a model of the situation before the crisis in Ukraine. Draw a model of a representative individual firm in the market for wheat, i.e. an Australian wheat farmer who is a price-taker in the global market for wheat, in long-run equilibrium. Comment on the assumed market structure. Show and explain the amount of wheat the farmer will produce to the market, and explain revenue, costs and profits.“Competition among firms promotes operational efficiency, and production of goods that the consumers value.” Agree or disagree with this statement. Please provide a rationale for either option.Please answer all 1. Coldwater Bicycle Company operates its factories at capacity and holds a dominant market position in its home country. When it receives a premium priced order from a new customer in another country, it must decide whether to fill that order or continue to supply the full demand in its home market. When it decided not to completely fill the new order, it incurred Group of answer choices a. Sunk costs b. Average costs c. Opportunity costs d. Marginal costs 2. What might happen if a car dealership is awarded a bonus by the manufacturer for selling a certain number of its cars monthly, but the dealership is just short of that quota near the end of the month? Group of answer choices a. Potential buyers will lose buying power at the dealer b. It may sell the remaining cars at huge discounts to hit the quota c. It creates an incentive to sell cars from different manufacturers d. It would ruin the relationship between dealer and manufacturer…
- In this week’s discussion we focus on market competition and the power of firms to set prices. (a) Along with your textbook reading, review the videos, blog, and articles on market competition. Then respond to the following questions: If all the firms in an industry are charging the same price, is it fair to say that they are engaged in price collusion? To what extent might this be a plausible explanation? Are there any other possible explanations? What type of market structure do you think is more conducive to firms engaging in price-fixing? Why do you think the price-fixing situation in the case described went on for so long? (one paragraph) Click the link to review a recent price-fixing case on bread. (b) In your town or city try to find a local business that appears to enjoy some degree of monopoly power (it does not have to be a pure monopoly: one unique product and one seller). Briefly describe the nature of this business and explain some of the factors that give it monopoly…In this week’s discussion we focus on market competition and the power of firms to set prices. (a) Along with your textbook reading, review the videos, blog, and articles on market competition. Then respond to the following questions: If all the firms in an industry are charging the same price, is it fair to say that they are engaged in price collusion? To what extent might this be a plausible explanation? Are there any other possible explanations? What type of market structure do you think is more conducive to firms engaging in price-fixing? Why do you think the price-fixing situation in the case described went on for so long? (one paragraph) 7 Canadian companies committed indictable offences in bread-price fixing scandal: Competition Bureau | Globalnews.ca https://globalnews.ca/video/rd/1150756931838/?jwsource=clWhy is the perfect competition often used as a benchmark? Question 3 options: The perfect competition model is more frequently observed in the real world compared to other market models It provides a useful comparison to markets that operate in more complex, real-world conditions. It accounts for a variety of issues like pollution, inventions of new technology, poverty, and government programs that other models do not account for. In the real world, all markets are perfectly competitive, so this model allows us to compare them to one another.
- 1.) Which one of the following sets of circumstances could the existence of economies of scale cause in a market? a.) More firms looking to move overseas. b.) Firms merging with and buying out other firms in their markets, thus leading to an increase in market competition c.) More american overseas firms will decide to come home. d.) None of the three other possible answers listed here are correct.1. A competitive industry is composed of 24 identical firms. Each firm has the following marginal cost of production in the short-run: MC = 58 +8Q. Each firm has the following Total Cost of production in the short-run: TC = 2 + 58Q +4Q². Demand for the product is given by the following demand curve: Qd = 1,211 - 2P. a. Explain why each firm will produce where market equilibrium price (Pe) equals the firm's marginal cost of production (MC). b. Derive an equation for the industry supply curve (i.e., Q₁ = .....). c. Find the market equilibrium price and quantity.. d. Are firms in this industry earning profit or losses in the short-run? (Hint: first compute how much output each firm produces). e. Compute the deadweight loss that would be produced if the government placed a $15 per unit tax on suppliers.. f. Who bore the greater burden of the tax, consumers or producers? Explain.Which of the following is true? 1) Since there are few firms that match the conditions assumed in perfect competition, the model is not very useful. 2) The model of perfect competition is a good example of the old adage, "That's O.K. in theory, but not in practice." 3) Although few world markets meet the assumptions of perfect competition, the model is useful in analyzing real world forces that affect prices and outputs. 4) The model of perfect competition comes very close to describing the real world.
- Q: How would each of the following affect the market supply curve for tobacco plant in North Carolina? Show your answers graphically and briefly explain the rationale behind each shift. a. A drought sweeps through the state. b. There is a hike in the price of fertilizer. c. A new and improved crop rotation technique is discovered. d. The government withdraws current tax breaks from tobacco farmers.Student Resources Working at Clayton.... 3/3 practice Gigantic Pharmaceutical Corporation has a patent on a prescription drug, making it the only manufacturer of that prescription drug. Gigantic is currently earning a positive economic profit. (a) Draw a correctly labeled graph for Gigantic and show each of the following. (i) The profit-maximizing quantity, labeled QG (ii) The profit-maximizing price, labeled PG (iii) The average total cost curve, labeled ATC (iv) The area representing the consumer surplus, shaded completely (b) Suppose the demand for the prescription drug increases, and Gigantic hires its warehouse workers in a perfectly competitive labor market. (i) What will happen to Gigantic's demand for warehouse workers? Explain. (ii) What will happen to the wage rate Gigantic pays its warehouse workers and the number of warehouse workers it hires? (c) After Gigantic's patent expires, another firm enters the prescription drug market and produces an identical drug that sells for…Phoenix Electricity is the only company providing electricity in City H. What kind of market structure should be used to analyze Phoenix Electricity’s production decision? Suppose Phoenix Electricity relies heavily on natural gas but there is a drastic increase in the price of natural gas recently. How does this affect the output and price of Phoenix Electricity? Show the results with the aid of a diagram.(For the sake of simplicity, do NOT draw the AC curve in your answers.) Will Phoenix Electricity earn a larger or a smaller amount of profit? Use words only to explain your answer.