Differences provide a rationale for anti-trust legislation

Assignment Help Microeconomics

Reference no: EM13817232

Part -1:

Q 1: Is price elasticity of demand at GCU elastic or inelastic? What could you do to find out?

Q 2: Most managers and executives believe their firm has an opportunity to take advantage of economies of scale; however, many firms do not. Slect one of the questions below and respond.

How could you determine if your firm has economies of scale?

What type(s) of firms typically have economies of scale? Which do not?

Part -2:

The long-run equilibrium for a perfectly competitive firm is zero-profit equilibrium. Does this mean that owners of these firms have no income? Explain.

How does the price and level of output for a monopolist differ from that of a purely competitive firm? Is this due to differences in the cost of doing business? Do these differences provide a rationale for anti-trust legislation? Explain.

Part -3:

Q1
There are estimates that as many as 4,000 pizzerias open every year in the U.S. and just as many close. Why does this continue to happen?

The manufacturers of R.C. Cola, with 2.1% market share in the soft drink industry, recently launched a new advertising campaign describing their brand as a "hip alternative" to "corporate colas" like Coke and Pepsi. Why don't they simply try and gain market share by cutting price? What property of oligopoly markets explains this type of behavior?

Part -4:

Q1
Why would the manufacturers of autos resist attempts to establish higher fuel efficiency standards? How would their costs, sales, and profits be affected?

Select one of the cases below and discuss what would happen to marginal physical product and why:

More secretaries are hired in an office.
More professors are hired to teach economics.
More construction workers are hired to construct an office building.

Part -5:

Q1
Identify the Classical prescription for curing unemployment and contrast it with the Keynesian prescription. Which prescription do you agree with? Why?.

Q2
In 2013-2014, the nation was struggling with a persistent high level of unemployment, low rates of economic growth, and high federal budget deficits. Explain how solutions to these economic problems conflict with one another. If you were economic dictator, how would you proceed against this set of problems?

More construction workers are hired to construct an office building.

Part -6:

Classical economic theory says there is a linkage between investment and savings. Explain the source of this linkage. What is the argument that says this link is not as strong as classical economists believe? (Hint: Differentiate between the parties that save and those that invest, and their rationale.)

If the federal government were required to balance the budget each year, would this have a positive or a negative impact on the economy? Why?

Part -7:

The Role of Federal Reserve Banks

"In many ways, the Federal Reserve does not control the level of interest rates nor the money supply. Rather, this is controlled by the actions of individual banks throughout the economy." Explain the rationale behind this statement. What action is required by the banks for Federal Reserve policy to be effective in stimulating the economy? What can the banks do to negate a Fed stimulus?

In 2014, short-term interest rates were near zero, and yet the economy was still sluggish with low rates of economic growth and relatively high unemployment. What monetary policies should be pursued in such an environment? How might they work?

Part -8:

The U.S. has accused China of artificially deflating the value of their currency. What would be the motivation for the Chinese to pursue such a policy? How might Chinese citizens be hurt by these actions?

Policies established by the World Bank and the IMF have been the subject of much criticism, especially from the developing world. Why might developing world nations be critical of these policies? Do you think the policy actions are justified? Explain.

Reference no: EM13817232

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