Reference no: EM133185493

Topic 7: Increase in Fixed Costs

1. Suppose a business experiences a sudden increase in its fixed costs. For example, suppose property taxes increase dramatically. What impact, if any, will this have on the following:

a. the firm's AFC (average fixed cost);

b. the firm's AVC (average variable cost);

c. the firm's ATC (average total cost); and,

d. the firm's MC (marginal cost)?

2. What changes, if any, is there likely to be in these same cost CURVES?

Topic 8: Your Own Business

Assume that you are going to start a small business of your own.

Describe the business and discuss the following:

a. What costs you would incur;

b. What competition you might experience;

c. How you would determine the price you would sell your product; and,

d. How much product would you produce?

Topic 9: Real-World Monopolies

Describe an example of a real-world industry or market that would be considered by economists to be a natural monopoly.

1. What characteristics of the industry make it a monopoly?

2. What is the impact of the monopoly power on its customers?

3. Why might the government want to regulate natural monopolies?

4. How might such regulation be structured?

Topic 10: Role of Advertising

Assume that you are going to start a small business of your own. Further, imagine that you are able to adequately differentiate your product, or service so that you can establish your business as a monopolistically competitive firm.

a. Describe the business and its likely main competitors.

b. How would you structure your advertising and customer service to differentiate your product/service?

c. How easy would it be for new competitors to enter your market and erode your customer base or selling price?

d. What would be your prognosis for the long term profitability of such a business?

e. What could you do to protect that long term profit stream?