Bundle: Microeconomics, 13th + Aplia, 1 Term Printed Access Card
13th Edition
ISBN: 9781337742535
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 11, Problem 10QP
To determine
Explain the advantages of the market theories that an individual thinks in more focused and analytical ways.
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Microeconomics
View the video at the link below and share your thoughts on the economic concepts that you believe are applicable. In your response, provide a rationale on whether or not a firm has to possess market power in order to raise prices.
The video is: How to Raise Prices without losing Customers
How does competition affect prices in a market system? How does it affect supply(what producers provide) and demand (what consumers want)?
Chapter 11 Solutions
Bundle: Microeconomics, 13th + Aplia, 1 Term Printed Access Card
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- It is often said that a competitive market is more beneficial for the consumers as compared to the monopoly market. Why ? Explain.arrow_forwardThere are several hamburger shops around you. You are trying to find ways to make your hamburger shop the most successful hamburger shop in your area. What is at least one way you would differentiate your shop from others?arrow_forwardPicture a scenario in which the fashion industry is suffering from monopolistic price gouging and a dwindling demand (due to the existence of sweatshops and environmentally unfriendly business practices). A hypothetical situation such as this is likely to cause high unemployment in the fashion industry. What could the government do to correct this market failure? Including diagrams where/if appropriate)arrow_forward
- Answer the following questions. 1. In the year 2000, the town of Cuenca in Batangas did not have mountain resorts. Because of the influx of mountaineers to Mount Maculot during weekends, there are now five resorts operating in the said town and more than 10 resorts in nearby towns. All these resorts offer the same amenities-swimming pools and affordable lodgings. What feature of competitive markets does this demonstrate? Explain your answer.arrow_forwardCompetition determines market price because the more that toy is in demand (which is the competition among the buyers), the higher price the consumer will pay and the more money a producer stands to make. ... Greater competition among sellers results in a lower product market price.arrow_forwardImagine a scenario in which the fashion industry is suffering from monopolistic price gouging and a dwindling demand (due to the existence of sweatshops and environmentally unfriendly business practices). A hypothetical situation such as this is likely to cause high unemployment in the fashion industry. What could the government do to correct this market failure? Including diagrams where/if appropriate)arrow_forward
- Your friend is going to start a business. One important decision he/she has to make is setting prices for the products. In economics, a firm may set its prices differently under different situations. Based on the economic theories learned in this course, explain to your friend how a profit-maximizing firm should set its prices under different situations.arrow_forwardQUESTION 23 In the 1950s, Walt Disney began to plan the development of a theme park that would eventually become Disneyland. Disney hired an economist to help determine whether the park would be a financial success. This economist surveyed managers of existing amusement parks for advice. Many of these managers A. recommended that the theme park be located in California because population in the state would increase greatly in the future. Disney followed this advice. B. recommended that Disney first build an audience for his park by offering the ABC television network a weekly program that would feature Disney movies, cartoons and original programming. Walt Disney followed this advice. Both the television program and Disneyland were financial successes. C. recommended that Disney not build the park and leave the amusement park business to those who knew what they were doing. D. believed that a theme park would be very successful because the Disney name created a market among children…arrow_forwardIdentify two products that have either (a) fallen sharply in price or (b) gotten significantly better without price increases. How did these changes come about? Describe how society benefits from this type of market competition.arrow_forward
- Use the following information to answer questions 1 to 5. A firm is deciding whether or not to enter a new market. The decision tree for the firm is provided below. The prompt below the decision tree explains how the decision tree was created. Enter Do Not Enter Allowed 0.9 Denied 0.1 3 Research No Research Good 0.7 Bad 0.3 5 6 Produce Sell Produce Sell Produce Sell 8 9 10 High 0.75 Low 0.25 High 0.25 Low 0.75 High 0.6 Low 0.4 Profit (5000s) 1200 -800 -200 1200 -800 -200 1400 -600 0 -100 0 At node 1, the firm must decide whether to enter the new market or not. The cost of attempting to enter is $100,000. The upper branch from node 2 shows that the firm has a 0.9 probability of being allowed to enter the market. If the firm is allowed to enter, it will have to pay $1,500,000 to buy the facilities required to become a part of the market. Node 3 shows that the firm will then consider doing a research study to forecast demand for their new product prior to beginning production. The cost of…arrow_forwardYou decide to create a burger restaurant named BurgerDeals to help pay for college fees. The table below contains total pricing information for your single product, large extra-cheese burger. Your town's burger market is fiercely competitive, with big extra-cheese burger selling for $7 on average. Fill in the blanks in the table and answer the following question. If you produce at the profit-maximizing level (or loss-minimizing level), what is the amount of economic profit (or loss) per burger will you make?arrow_forwardYou decide to create a burger restaurant named BurgerDeals to help pay for college fees. The table below contains total pricing information for your single product, large extra-cheese burger. Your town's burger market is fiercely competitive, with big extra-cheese burger selling for $7 on average. Fill in the blanks in the table and answer the following questions F. How many burgers should you make if you want to optimize your profit?G. If you produce at the profit-maximizing level (or loss-minimizing level), what is theamount of economic profit (or loss) per burger will you make?H. Illustrate graphically BurgerDeals supply curve.arrow_forward
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