supply and demand analysis with equilibrium price and quantity
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You will need to complete a paper in APA format, but please put the question numbers, so you can do well.
1. What market structure is the most efficient for consumers and why?
2. If there is pollution in the lake, what would the government need to do solve the problem(relate to externalities)?
3. Why is strategic interdependence important for the market structure of oligopolies?
4. What happens in the market for oranges if there is a hurricane that destroys the orange crop(use supply and demand analysis with equilibrium price and quantity)?
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Solution Summary
Supply and demand analysis with equilibrium price and quantity is applied.
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1. What market structure is the most efficient for consumers and why?
It would depend on the type of product. An industry producing a staple product such as sugar, apples, microchips, paper or paper clips would be most efficient for consumers if it was perfectly competitive. Many firms will produce the product and compete for consumers. If there are any economic profits, more firms will enter the industry and the price will go down until the firms are making the costs back plus opportunity cost. This isn't only for perfectly competitive firms. We have seen that computers, which have brand recognition, also decrease in price through competition, even if it isn't perfect competition. However, a natural monopoly can also be the most efficient for consumers. If a product has increasing returns to scale that is, the more it is produced, the cheaper it is, a natural monopoly might actually be able to produce a cheaper product than two or more firms. This applies to such industries as landlines, railroads and hydro where initial investments are very high and duplication is both costly and a waste of resources (it might not make sense to have a number of rail trucks running beside each other from different companies). Often, natural monopolies are regulated which can mean both, economic ...
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