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Economics: supply demand price and competition factors

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1. The market for micro-computers (PCs) is fairly competitive, the products are somewhat homogeneous, and over time firms have entered looking to make profits on new configurations of the micro-computer. Over time, profits:

a. have risen dramatically.
b. have stayed about the same for most firms.
c. have become razor thin for many producers.
d. are not important since this industry is in the nonprofit sector.

2. Economists tend to focus on one structural aspect of market organization that is more important than the others, which is:
a. the number of buyers and sellers.
b. product homogeneity or differentiation.
c. the quality of market information.
d. entry and exit conditions.

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1. The market for micro-computers (PCs) is fairly competitive, the products are somewhat homogeneous, and over time firms have entered looking to make profits on new configurations of the micro-computer. Over time, profits:
a. have risen dramatically.
b. have stayed about the same for most ...

Solution Summary

A sentence or two explains each choice.

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Production and Cost curves questions and Market Structures questions

Answer all three questions.

1. Discuss short and long run costs. For the short run discuss the relationship between cost theory and production theory and the concept of diminishing returns --- what is diminishing returns and how does it shape production and cost curves. Then, discuss the relationship between short run cost curves and long run cost curves. Finally discuss the concept of economics of scale and how long run costs curves shape the economic structure of industries.

2. Define the economic characteristics of the market structures (Perfect Competition, Monopolistic Competition, Oligopoly and Monopoly). Select ONE of the market structures and show how we can predict the short run and long run profit maximizing equilibrium positions with respect to quantity produced, price, total costs, total revenues and profits.

3. How do markets determine the payments to the various factors of production and determine the distribution of income? Explain.

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