Draw a profit/price trade-off curve that is the result of moving from a competitive to a monopoly industry organization. Show the equilibrium position for the regulator with a political support function (PS curve). What can we say about prices and profits of the regulated industry if it started as a competitive industry?
What will be an ideal response?
The above diagram shows the equilibrium position for the regulator with a political support function (PS curve). The dark curve shows the profit/price trade-off that a firm faces as it moves from a competitive industry to a monopoly. This political equilibrium results in a price greater than the price under a perfectly competitive market structure, but lower than the price under a monopoly market structure. If this industry was originally a competitive industry, then prices and industry profits will be higher under regulation.
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Which of the following does not explain why consumers buy products that many other consumers are already buying?
A) cost-effective way to gather information about a product B) the satisfaction people derive by being viewed as "fashionable" C) differences in tastes and preferences D) technology
We know the goal of a budget-constrained public enterprise
Indicate whether the statement is true or false
Refer to the accompanying figure. The opportunity cost of producing one bushel of corn is:
A. 250 bushels of wheat. B. ½ of a bushel of wheat. C. 500 bushels of wheat. D. 2 bushels of wheat.
Labor unions are organizations that
A. try to make labor markets more competitive. B. try to secure economic improvements for all workers. C. try to secure economic improvements for their members. D. try to secure more opportunities for more workers in the economy.