Chapter 18, Problem 4DQ

To determine

In which state pedicures and manicures will be more expensive? If class room training was designed to improve the quality of pedicure and manicure to keep competition out.

Concept introduction:

Competition in a market:

It is a way by which the existing firm in the market tries to have dominance in the market with a larger market share. The way of dominance depends on the quality, restrictive laws, and the price of goods provided to the consumers.

Explanation:

• Manicurists and pedicurists are required to be licensed in both California and Florida. However, people practicing these occupations have different training periods in two states. In Florida, they take 240 hours of classroom program and in California they take 400 hours of classroom program.

• This shows that the people in California invest more in practicing these occupations in comparison to people in Florida. Hence, pedicures and manicures will be more expensive in California.

The per capita consumption can help in deciding, if the variation in practicing program time was to enhance quality or to keep competition out.

• If the per capita consumption of manicure and pedicure is high in both the states, then it means that extra hours of training in California were done to restrict the firm to enter into market, so that few firms can get benefitted through monopoly power at the cost of high price faced by the consumers.

• If the per capita consumption of manicure and pedicure is low in both the states, then it means that the variation in the practicing hour was done to enhance the quality of manicures and pedicures. The reason is that the demand for such practice is very low in the market. So, the quality is enhanced to attract consumers.