Economics Homework Nine Answers - Student Ten

Aran M

1. Identify an industry not mentioned in the lecture that is an oligopoly, and explain why. Computer companies, such as Dell, Hp, Acer, and Apple.

Good.

2. Order the types of industries from those having the lowest price (due to the greatest competition) to those having the highest price (due to the least competition). Perfect compaction b.Perfctly contestable markets c.monopalistic compaction d.oligopoly e.cartel f.Monopoly

Correct, but spellings are off. E.g., "competition", not "compaction"

3. Explain which specific type of industry (e.g., oligopoly or something else) each of these quotes probably refers to: (1) "She's the finest hair stylist in town; no one has her special style!", (2) "Crazy Eddie ... his low prices are INSANE!", (3) "Don't like his prices? He's the only one in town selling what you need." monopolistic compaction, Perfect compaction, Monopoly

Correct. note spelling errors again.

4. List how monopolies can be established. The licensing of professionals creates a barrier to entry. Control of a valuable resource can also create a monopoly. Economies of scale can create a monopoly by rewarding the biggest company with the lowest average cost. Government grants of monopoly such as patents and copyrights.

Also government-created monopolies by law, as in cable TV franchise companies. (Minus 1).

5. What prevents a monopoly from increasing its prices without limitation? When the MR=MC,the price is usually set. the demand curve still applies to monopoles the availability of substitutes may also limit the price.

Not many substitutes. The Law of Demand applies due mostly to the income effect. (Minus 1).

39/40. Good.