Concept explainers
(a)
To find:
Whether soy market is a
Answer to Problem 1P
The soy market is a perfectly competitive market.
Explanation of Solution
Soy market is a perfectly competitive market because there are large number of buyers and sellers, and the firms sells homogeneous product in the soy market.
Monopolistic market refers to the market structure in which there are many firms which sell closely related but differentiated commodities.
Perfectly competitive market:
Perfectly competitive market refers to the market structure in which there are many buyers and sellers. The sellers sell homogeneous commodities in this market structure and there is free entry and exit of firms.
(b)
To find:
Whether retail clothing is a perfectly competitive market.
Answer to Problem 1P
The retail clothing is a monopolistically competitive market.
Explanation of Solution
Retail clothing is a monopolistically competitive market because there are many firms in this market which deal with closely related but differentiated commodities. For example, shirts can be different in color, size, and quality but all are closely related. So, retail clothing is a monopolistically competitive market.
Monopolistically competitive market:
Monopolistic market refers to the market structure in which there are many firms which sell closely related but differentiated commodities.
Perfectly competitive market:
Perfectly competitive market refers to the market structure in which there are many buyers and sellers. The sellers sell homogeneous commodities in this market structure and there is free entry and exit of firms.
(c)
To find:
Whether S restaurant in B Hills is a competitive market.
Answer to Problem 1P
The S restaurant in B Hills is a monopolistically competitive market.
Explanation of Solution
The S restaurant in B Hills is a monopolistically competitive market because there can be many other restaurants in B Hills but not in large number. Since the restaurant deals with closely related but differentiated products. So, this market is termed as monopolistically competitive market.
Monopolistically competitive market:
Monopolistic market refers to the market structure in which there are many firms which sell closely related but differentiated commodities.
Perfectly competitive market:
Perfectly competitive market refers to the market structure in which there are many buyers and sellers. The sellers sell homogeneous commodities in this market structure and there is free entry and exit of firms.
Want to see more full solutions like this?
- Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 10. What is the mechanism or process that allows the expenditure multiplier to “work” in theKeynesian Cross Model? Explain and show both mathematically and graphically. What isthe underpinning assumption for the process to transpire?arrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 15. How is the Keynesian expenditure multiplier implicit in the Keynesian version of the AD/ASmodel? Explain and show mathematically. (note: this is a tough one)arrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 13. What would happen to the net exports function in Europe and the US respectively if thedemand for dollars rises worldwide? Explain why.arrow_forward
- 20. Given the mathematical model below, solve for the expenditure multiplier for a) government spending, G; and b) for consumer taxes, T. (medium difficulty) Y=C+I+G C=Co+b(Y-T) 1 = 10 T=To+tY G = Go+gYarrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 11. What exactly is a rectangular hyperbola and what relevance is it to classical economics?arrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 9. Explain the difference between absolute and comparative advantage in a family setting, i.e.using parents and children. What can we glean from knowing about comparative andabsolute advantages?arrow_forward
- Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 18. Explain why most economists believe it is absolutely necessary to allow free trade in aneconomy. Why is it harmful (under most circumstances) to have tariffs and trade barriers?arrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 19. How does the multiplier work in theory? How would you interpret Robert Barro’s empiricalfindings of a multiplier (note, not the MPC) of 0.8? What about Christine Romar’s finding ofa multiplier of 1.5?arrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 16. Explain the difference between absolute and comparative advantage. Be specific. How woulda country (or person) know that they had such an advantage?arrow_forward
- Use the Feynman technique throughout. Assume that you’reexplaining the answer to someone who doesn’t know the topic at all: 2. Give an overview of the equation of exchange (EoE) as used by Classical Theory. Now,carefully explain each variable in the EoE. What is meant by the “quantity theory of money”and how is it different from or the same as the equation of exchange?arrow_forwardUse the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all: 5. What is “Say’s Law” and how is it different from “Keynes’ Law”? How are these “laws”directly seen in the respective AD/AS models? Why is there such a huge disagreement aboutwhich “law” is correct?arrow_forward8. Read these recent quotes (taken from blogs) below and determine whether the sentiment inthe quote is Keynesian or Classical. Just write “Keynesian” or “Classical” in the space rightafter the Ph.D. economist’s name: a) “Market economies are not self-stabilizing and they do not quickly adjust to findthe socially optimal employment rate in the absence of active stabilizationpolicies.” – Economist Roger Farmer b) “The paradox of thrift purportedly shows that saving is bad and results in poverty.Well, it (saving) isn't that bad, because here we have the recognition that addedsaving results in lower interest rates and more investment.” – Economist BillWoolsey c) “In much of the world, there is insufficient demand to fully employ the valuableservices of available humans and machines. This characterization of the globaleconomy has been true for the past seven years. It seems likely to be true for yearsto come.” – Economist Nararyana Kocherlakota d) “The economic cost of unemployment…arrow_forward
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
