Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Chapter 22, Problem 12CQ
To determine
The negative and positive effects of competition in the market.
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How does competition affect prices in a market system? How does it affect supply(what producers provide) and demand (what consumers want)?
How do firms or business in a competitive market decide what prices are and how does the economy look like? What if they are all selling the same product?
What is the importance of competition in markets?
Chapter 22 Solutions
Economics: Private and Public Choice
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- Explain different types of competition and also state why is competition good for the consumer from an economics perspectivearrow_forwardIn the context of economics, competition implies that: There is only one seller in the market. The same product is available at a variety of prices. There are multiple independent buyers and sellers in the market. Sellers can influence market prices by creating product shortages.arrow_forwardThe graph shows the market for smartphones . On the graph, draw a point at the market equilibrium and label it 1. Now draw a curve to illustrate what happens in the market for smartphones if more firms produce smartphones while all other influences on the market remain the same. Label the curve S1 Draw a point at the new market equilibrium and label it 2. >>> Draw only the objects specified in the question.arrow_forward
- If the demand for pizza falls, pizza suppliers will suffer economic losses and some firms will leave the industry. Why is this considered good? Shouldn't we feel sorry for these business owners?arrow_forwardBusiness markets have several characteristics that contrast sharply with those of consumer markets. Name and briefly characterize five of those contrasts.arrow_forwardHow do firms in a competitive market work?arrow_forward
- How do price controls affect the workings of a perfectly competitive market? Use a supply demand diagram as part of your answer.arrow_forwardDefine a perfectly competitive market. A. Market that makes it possible for firms or businesses to reduce the quality of their products or services in order to cut their own costs B. Market model where many firms and businesses compete against each other to create an innovative product at the best cost, which ultimately benefits society C. Market where a firm or business has no competition in manufacturing a good or providing a service D. Market with few sellers and many buyersarrow_forwardAre US markets becoming less competitive and, therefore, less efficient?arrow_forward
- A competitive market system is efficient. Discuss and explain this statement in detail. Your answer may include diagrams.arrow_forwardAnswer 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_forwardEveryone shops for things they need for themselves and for gifts for others. Imagine you are taking an online class, and you are looking to buy a new computer because your old one died. The class starts in two days. The market for computers is very competitive. There are several brands that have similar characteristics, such as storage capacity, processor speed, number of USB ports, etc., but you have owned one that you liked, and you want to buy that same brand, the X-Mark. You have a budget of $1,750. One popular store has the brand you like on sale for $999.99 because other stores sell them for that price. You have a friend at that store who tells you that the store paid $925 for that computer. Please evaluate and explain the willingness to pay, consumer surplus (calculate), demand, producer surplus (calculate), cost, and willingness to sell this transaction. Define these terms in your explanation, not as separate definitions. Incorporate the meaning into your narrative so that…arrow_forward
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