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2008 midterm with answers.doc

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Steve Joordens

Question 1Chapter 1Sunny was finishing high school in Ontario During Grade 12 she had learned a little bit about different degrees of competitionOne day Sunny was talking to her Guidance Teacher about her choices of which university she might attend Mrs Singh she asked her teacher is the market for University education perfectly competitive monopolistically competitive an oligopoly or a monopolyWell her Guidance Teacher replied it all dependsWhy did Mrs Singh tell Sunny that it all dependsAnswer 1 Sunnys high school guidance teacher said that the type or degree of competition for University education dependsThe reason she could not give Sunny a clear and definitive example is that the degree of competition for most products depends on the perception of the buyer and on the buyers ability to find alternativesIf Sunny was an A student and a Scholarship winner and her family could give her generous financial support and she didnt care whether she lived at home she could get into and afford to attend any University she wanted to There are several dozen Universities in Canada and hundreds more around the rest of the word In this case Sunny could consider the market to be perfectly competitive All universities were available to her they all offered undergraduate degrees and she would have huge choiceIf Sunny thought that only a small number of universities had the international reputation and the name recognition that would help her get the best jobs and into the best graduate schools she might limit her choices to a small number of Canadas larger better known and better reputed universities For example a recent international survey named McGill as Canadas top ranked University It would be expensive to live in Montreal for four years but Sunny might perceive the additional cost to be worth it If this was Sunnys perception she might consider the market to for education to be monopolistically competitiveSuppose Sunny wanted to go into an engineering program and that having lived at home all her life she wanted a chance to live in a new city and make new friends That would rule out the University of Toronto and Ryerson University At the same time she didnt want to move too far away since it would be nice to come home on weekends to do her laundry and eat her Moms cooking In this case Sunnys options were now reduced to Queens Waterloo Western and perhaps a couple of others With only 4 or 5 outoftown choices available Sunny was looking at an oligopolyFinally suppose Sunnys grades out of high school were in the 60s She was a decidedly mediocre student who had not lived up to her academic potential After applying for University the only place she could get accepted was into the undergrad business program at Schulich Poor Sunny she was dealing with a monopoly
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