MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 14, Problem 7QAP
a)
To determine
The situation in which the product differentiation is real and it is an illusion.
b)
To determine
An objective universal answer for option ‘a’.
c)
To determine
The individually objective answer for options ‘a’ and ‘b’.
d)
To determine
Economic implication of the benefit of market.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Which is most likely the result of healthy competition in the market?
Question 1: Microsoft sells two types of office software, a word processor it calls Word, and a spreadsheet it calls Excel. Both can be produced at zero marginal cost. There are two types of consumers for these products, who exist in roughly equal proportions in the population: authors, who are willing to pay $120 for Word and $40 for Excel, and economists, who are willing to pay $50 for Word and$150 for Excel.
a. Suppose that Microsoft execs decide to sell Word and Excel separately.
What price should Microsoft set for Word? (Hint: Is it better to sell only to authors, or to try to sell to both authors and economists?)What price should Microsoft set for Excel?What will Microsoft’s profit be from a representative group of one author and one economist?b. Suppose that Microsoft decides to bundle together Word and Excel in a package called Office, and not offer them individually.
What price should Microsoft set for the package?How much profit will Microsoft generate from a representative…
In which type of market, monopolistic or competitive market, is the equilibrium market price lower? Why?
Chapter 14 Solutions
MICROECONOMICS
Ch. 14.1 - Prob. 1QCh. 14.1 - Prob. 2QCh. 14.1 - Prob. 3QCh. 14.1 - Prob. 4QCh. 14.1 - Prob. 5QCh. 14.1 - Prob. 6QCh. 14.1 - Prob. 7QCh. 14.1 - Prob. 8QCh. 14.1 - Prob. 9QCh. 14.1 - Prob. 10Q
Ch. 14.A - Prob. 1QECh. 14.A - Prob. 2QECh. 14.A - Prob. 3QECh. 14.A - Prob. 4QECh. 14 - Prob. 1QECh. 14 - Prob. 2QECh. 14 - Prob. 3QECh. 14 - Prob. 4QECh. 14 - Prob. 5QECh. 14 - Prob. 6QECh. 14 - Prob. 7QECh. 14 - Prob. 8QECh. 14 - Prob. 9QECh. 14 - Prob. 10QECh. 14 - Prob. 11QECh. 14 - Prob. 12QECh. 14 - Prob. 13QECh. 14 - Prob. 14QECh. 14 - Prob. 15QECh. 14 - Prob. 16QECh. 14 - Prob. 17QECh. 14 - Prob. 18QECh. 14 - Prob. 19QECh. 14 - Prob. 20QECh. 14 - Prob. 21QECh. 14 - Prob. 22QECh. 14 - Prob. 23QECh. 14 - Prob. 24QECh. 14 - Prob. 25QECh. 14 - Prob. 1QAPCh. 14 - Prob. 2QAPCh. 14 - Prob. 3QAPCh. 14 - Prob. 4QAPCh. 14 - Prob. 5QAPCh. 14 - Prob. 6QAPCh. 14 - Prob. 7QAPCh. 14 - Prob. 1IPCh. 14 - Prob. 2IPCh. 14 - Prob. 3IPCh. 14 - Prob. 4IPCh. 14 - Prob. 5IPCh. 14 - Prob. 6IPCh. 14 - Prob. 7IPCh. 14 - Prob. 8IPCh. 14 - Prob. 9IP
Knowledge Booster
Similar questions
- How does competition affect prices in a market system? How does it affect supply(what producers provide) and demand (what consumers want)?arrow_forwardSo, which of these options are true about the number of sellers in your market - the market for corn? Kim There are many sellers (and, of course, many buyers). James That's correct. Corn is a product produced globally. There are thousands, if not hundreds of thousands, of individual farmers. Нарру Economics Mentor Is the corn that you produce different from your competitors? What kind of product do you sell? Kim Differences exist (heterogeneous) Undifferentiated (homogeneous)arrow_forwardTwo street vendors (Vendor Y and Vendor Z) with mobile carts produce the same good which they sell at the same price. Customers are located along a linear boardwalk with six locations (Location A through Location F), with a different number of customers in each location, given by the number beneath each letter, as pictured below: A B C D E F 3 4 6 6 8 8 So, there are 3 customers in location A, 4 in B, 6 in C, 6 in D, 8 in E and 8 in F. The vendors simultaneously choose their location, and cannot move once their choice has been made. Customers will make a purchase from whichever vendor is closest to them, and equally close customers will be split evenly between Vendor Y and Vendor Z. The vendors CAN locate in the same location (so, both could locate in location A). How many customers will Vendor Y capture in equilibrium? (Assume that it is possible to capture half a customer, if necessary).arrow_forward
- Exercise 3.5. Pablo, Dirk and Franz run the only bar in town. Pablo wants to sell as many drinks as possible without losing money. Dirk wants the bar to bring in as much revenue as possible. Franz wants to make the largest possible profits. Using a single diagram of the bar's demand curve and its cost curves, show the price and quantity combinations favoured by each of the three partners. Explain.arrow_forwardThink about the definitions of competition and consumer sovereignty in economics. How could we get the school canteen to offer better food at lower prices?arrow_forwardIn an economy with two Individuals ( A and B) discuss the results in exchange in the following situations 1. Perfect competition in which A and B accept prices as given by the market 2.A is a monopolistic and can set any price B chooses 3 A is a perfect price discriminator and can charge a different price for each unit tranded. 4 does each of these lead to a pareto efficient Solution ? It would be useful to work with an Edgeworth Box Diagram to present your solutionarrow_forward
- A dry cleaner has a sign in its window: “Free Internet Coupons.” The dry cleaner lists its Web site, and indeed there are good discounts available with the coupons. Most customers don’t use the coupons. What probably would be the main difference between customers who use the coupons and those who don’t? Some people might think “The dry cleaner offers the coupons to get people in the door to try the place out, but then the customers will pay the normal high price afterward.” But the coupons are always there, so even repeat customers can keep using the coupons. Is this a mistake on the business owner’s part? (Hint: Think about marginal cost.)arrow_forwardThe __ market is an example of __ type of market.arrow_forwardempirical evidence? 2. In 1964 the United States banned television advertising of cigarettes. Is it possible that the television advertising ban increased the cigarette industry's profits? Explain.arrow_forward
- What are the necessary conditions for economic efficiency? In what four situations might a market fail to achieve ideal economic efficiency?arrow_forward1. There are two brands of cigarettes X, Y. The demand for each is as follows: Qx = 80 - 2p Qy = 60 - 0.5p Assume that the marginal cost of producing cigarette X is $10, the marginal cost of producing cigarette Y is $8, and that the market for both cigarettes is perfectly competitive. Assume that each pack of cigarette X smoked does $5 worth of health damage to the smoker, and a total of $4 worth of health damage to the smoker’s neighbors via second-hand smoke. Each pack of cigarette Y smoked does $6 worth of health damage to the smoker, and $5 health damage to the smoker’s neighbors. a. Suppose the government decides to pursue a Pigouvian solution to eliminate social loss. What's amount of tax or subsidy would the government implement? What's the resulting quantity of demand for both cigarettes. b. Besides the Pigouvian solution, what else solution do you have? What are the conditions in order to successfully implement this?arrow_forward1. There are two brands of cigarettes X, Y. The demand for each is as follows: Qx = 80 - 2p Qy = 60 - 0.5p Assume that the marginal cost of producing cigarette X is $10, the marginal cost of producing cigarette Y is $8, and that the market for both cigarettes is perfectly competitive. Assume that each pack of cigarette X smoked does $5 worth of health damage to the smoker, and a total of $4 worth of health damage to the smoker’s neighbors via second-hand smoke. Each pack of cigarette Y smoked does $6 worth of health damage to the smoker, and $5 health damage to the smoker’s neighbors. (a) Explain why the public supply curves differ from the private supply curves, and how this represents the externality from second-hand smoke. Highlight the area(s) of your diagram that represents a social loss. (b) Calculate the social loss for both. (c) Suppose the government decides to pursue a Pigouvian solution to eliminate social loss. What's amount of tax or subsidy would the government…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, IncEconomics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub Co
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Economics Today and Tomorrow, Student Edition
Economics
ISBN:9780078747663
Author:McGraw-Hill
Publisher:Glencoe/McGraw-Hill School Pub Co