ECON 1BB3 Lecture Notes - Monopolistic Competition, Ceteris Paribus, Tim Hortons

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blushantelope733

29 Nov 2012

School

McMaster University

Department

Economics

Course

ECON 1BB3

Professor

Bridget O' Shaughnessy

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ECON 1BB3 Full Course Notes

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Market= a group of buyers and sellers. There are four types of market structure: perfect competition. Assuming that you have perfect competition can lead to disaster. There is lots of buyers and sellers and any individual buyer or seller cannot influence the price: monopoly (one seller, oligopoly, monopolistic competition. Quantity demanded (qd): the amount of a good that buyers are willing and able to purchase. The variables that influence how much buyers want to buy are: price, income. Normal and inferior goods: price of other goods. When the price of one goes up i buy less of the other good substitutes. Starbucks and tim hortons (remember this for first test) complements. If the gas price goes down tomorrow the demand for gas today will be very low. Expecting the price of something in the future which affects the consumer buying something today.

Related Questions

13. One of the limitations of Five Forces is that:

a. These tools reduce producer surplus

b. For one firm to increase profit, it takes it from other participants in the industry

c. Does not provide a firm with sustainable competitve advantage

d. both b & c.

15. All these are characterisctics of a monopoly except,

a. There is one seller of the product

b. Has few substitutes

c. Controls a large share of the market

d. Controls a small share of the market

22. Industries with high barriers to entry

a. Pushes profits to normal returns

b. increases the likelihood of firms entering the industry

c. help firms sustain profits

d. increases the number of competitors

14. How does Ebay differ from an economist's view of a perfect competitve market?

a. Ebay has few buyers whereas perfect competitve industry assumes many buyers

b. Ebay has few sellers whereas perfect competitve industry assumes many sellers

c. There is limited information in ebay whereas perfect competitive industry assumes full information for both buyers and sellers

d. There is no difference between these two markets

26. Low cost strategies are usually found in industries where

a. Products are not particularly differentiated

b. Price competion tends to be fierce

c. Both a and b

d. None of the above

Cigarettes - Price Elasticity of demand = - 0.67

A. Cigarettes

B. Alcohol

C. Sodas

D. None of the above

2. The demand for insulin will be ______________ than the demand for a Caribbean cruise in general

a. More elastic

b. More inelastic

c. Less elastic

d. Less inelastic

1. What happens when we reverse the information assumptions in the Akerlof model? Let us assume that buyers have perfect information about car quality, and that sellers have no information about the quality of any specific car (although they do know the distribution of car quality). Assume that all other basic assumptions apply as usual, including the buyer and seller utility functions.

(a) Explain how these information assumptions might be possible in certain circumstances. What sorts of goods would likely have markets that feature these counterintuitive assumptions?

(b) Imagine that you are a car seller who owns car i with quality Xi (un- known to you). What strategy could you pursue to sell the car in such a way that your utility increases?

1. In the formula for Bayes theorem if the w-probability is greater than the zero than the a-probably is less than the b-probability

true or false

2. posted offer markets with at least two sellers will generate prices that remain a little above prices from double auction markets

3. running the price clock in a dutch auction once will produce higher observed prices compared to running the clock twice

4. if losers pay winners in a sealed bid auction then they will eventually be willing to bid up to 50 percent more than the winning prize

5. with only one seller in a posted offer market prices willl tend to move upward toward the monopoly price

6. adjusting the concentration of sweet versus sour enabled rats to have a large negative income effect for sour water

7. a sales tax on large luxury boats will impact the buyers more than the sellers of these boats causing the buyers to pay more than half the cost of the sales tax

8. if each seller knew all of the sellers unit costs and the buyers knew all of the buyers unit values a buyer or seller would be able to calculate the competitive equilibrium price before an experiment began

9. suppose your income taxes rise only on incomes over 250,000 annualkly then your after tax income will be unafftected if your annual income is 100,000

those first nine are true and false

these are short answer

1. explain the logical steps to explain how negative price effects can reult from the negative income effects

2.what happens to observed prices inposted offer and double auction markets as the number of sellers drops to 2. what happens when these two markets sellers drops to 1

3. in a looser pay winner auction. why do bidders change their minds toward wanting to bid well above the value of the price even though they refused to do so at the beginning. how does this experiment explain why george bush and citizens changed their minds about preemptive attack on iraq. how do these experiments explain why england wanted to tax trade in the american colonies which led to rebellion and the formation of the us.

if you could help with any of these thatd be great

viridianweasel299

ECON 1BB3 Lecture Notes - Monopolistic Competition, Ceteris Paribus, Tim Hortons

ECON 1BB3 Full Course Notes

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