Would the market be efficient or inefficient

Reference no: EM132114569

Question: Apple's $1.29-for-the-latest-songs model isn't perfect and isn't it too much to pay for music that appeals to just a few people? What we need is a system that will be profitable but fair to music lovers. The solution: Price song downloads according to demand. The more people who download a particular song, the higher will be the price of that song; the fewer people who buy a particular song, the lower will be the price of that song. That is a free market solution-the market would determine the price.

Assume that the marginal social cost of downloading a song from the iTunes Store is zero. (This assumption means that the cost of operating the iTunes Store doesn't change if people download more songs.)

a. If the pricing scheme described in the news clip were adopted, would the market be efficient or inefficient? Explain.

b. Is the pricing scheme described in the news clip a "free-market solution"? Explain.

Reference no: EM132114569

Questions Cloud

Explanation of nature of suggested rater training program : A brief explanation of the nature of your suggested rater training program; (ii) its advantages; and (iii) its requirements

How is the price of natural gas determined : Home Heating Bills Surge Amid Record Cold If there's one thing that can set home heating costs soaring, it's a long, frigid blast from one of the coldest.

Is it better suited to building brand or defending it : Analyze it based on the six criteria. Is it a "good" brand? Is it better suited to building a brand or defending it?

Create model of PMSM AC Machine with LQR control in dq frame : Create a model of PMSM AC Machine with LQR control in dq frame? Need Clear notes about each and every element used in the model

Would the market be efficient or inefficient : Apple's $1.29-for-the-latest-songs model isn't perfect and isn't it too much to pay for music that appeals to just a few people? What we need is a system.

Critical to advancing policy changes in reimbursement : Describe what the potential for Telemedicine and remote patient monitoring may represent and why it is critical to advancing policy changes in reimbursement,

Contract with employment maybe unfairly terminated : Explain five (5) conditions under which a contract with employment maybe unfairly terminated.

How do you think the market would be organized : Use the information in Problem. Would a free world market in water achieve a fair use of the world's water resources? Explain why or why not and be clear.

Trends have for organizational strategies : What implications (positive and negative) do these trends have for organizational strategies?

User Account

All Pages