have a monopoly because: (1) a key resource is owned by a single firm; (2) the government gives a single firm the exclusive right to produce some good; or (3) the costs of production make a single producer more efficient than a large number of producers. Examples of monopolies include: (1) the water producer in a small town‚ who owns a key resource‚ the one well in town; (2) a pharmaceutical company that is given a patent on a new drug by the government; and (3) a bridge‚ which is a natural monopoly
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In-class exercises – Tute 3 - Elasticities & Welfare Price elasticity of demand: How to calculate Sign and sizes – illustration by demand curve E & TR Determinants/factors MCQs: 1. Question 4 (Quiz - topic 3): If Sam‚ the Pizza Man‚ lowers the price of his pizzas from $6 to $5 and finds that sales increase from 400 to 600 pizzas per week‚ then the demand for Sam’s pizzas in this range is: a. price inelastic. b. price elastic. c. unit elastic. d. cross elastic. e. income inelastic
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price of a product in any market situation. • The fact that markets are competitive means that prices fluctuate • So if more producers put more of their products on the market‚ the most likely result is that prices will fall. • The same thing will happen if buyers hold back from purchasing a product • In contrast‚ if producers restrict what they are willing to sell‚ then prices will increase‚ as well as a sudden surge in demand from consumers • Markets may
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if the maximum that a consumer is willing and able to pay is less than the minimum price the producer is willing and able to accept for a good. B. if the maximum that a consumer is willing and able to pay is greater than the minimum price the producer is willing and able to accept for a good. C. only if the maximum that a consumer is willing and able to pay is equal to the minimum price the producer is willing and able to accept for a good. D. none of the above. 15. In a competitive market
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be measured in various ways - including the market share taken by each of the leading businesses in the market; and the capability of firms to make abnormal or supernormal profits in the long run. Barriers to entry allow producers to prevent the successful entry of new producers into the market. The concentration of market power within an oligopoly can be measured by the concentration ratio. The five-firm concentration ratio measures the combined market share of the leading five firms in the market
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TOPIC - 2 DEMAND‚ SUPPLY AND MARKET EQUILIBRIUM The term ‘price’ has a great relevance in economics. In ordinary usage‚ price is the quantity of payment or compensation given by one party to another in return for goods and services. It is generally expressed in terms of units of some form of currency. But how does a product sell for a certain price‚ what constitutes the price of a product and how is the price determined is the bigger question. In economics‚ for a competitive market
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array of different markets. • In some markets‚ producers are extremely competitive (e.g. grain) • In other markets‚ producers somehow coordinate actions to avoid directly competing with each other (e.g. breakfast cereals) • In others‚ there is no competition (e.g. flights out of Tweed-New Haven airport). In general we classify market structures into four types: • perfect competition – many producers of a single‚ unique good. • monopoly - single producer of an unique good (e.g. cable TV‚ diamonds‚ particular
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Name: ________________________ Class: ___________________ Date: __________ ID: B Econ 2350 Midterm Exam‚ July 13th‚ 2010 True/False (total 20 points; 1 point per question) Indicate whether the statement is true or false. Please mark 0 for False and 1 for True. ____ ____ ____ ____ ____ 1. If the price of leeks falls by $2 per pound‚ then the demand for leeks will rise by 10 pounds. Therefore we can conclude that the demand for leeks is elastic. 2. Marginal revenue is equal to price if the demand
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consumer surplus enjoyed by the constituents. Based on your arguments‚ you are given the go-ahead to conduct a formal analysis‚ and obtain the following estimates of demand and supply: [pic] and [pic] . a) Graph the supply and demand curves. b) What are the equilibrium quantity and equilibrium price? c) How much consumer surplus exists in this market? d) If a $2 excise tax is levied on this good‚ what will happen to the equilibrium price and quantity? e) What will the consumer surplus be after
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for producers sweaters than Scotland. Chapter 4: 5. Technology advances have affected the market for computers by increasing the supply causing a shift to the right‚ which has also increased the demand for computer software‚ also lowering the price. As for typewriters it has decreased the demand because computers are becoming more affordable because they are cheaper to make. 10. a. Submitting graph in class. Equilibrium price is $6.00 and quantity is 81 pizzas. b. There would be a surplus so
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