22 question economics exam- 21 multiple choice – 1 short answerOctober 6, 2020
(1) Assume the following Input-Output Table depicts the inter-industrial relations of a city where, admittedly, people drink a lot of beer. Producers…October 6, 2020
Answer each question in a paragraph with a 200 + word counts. If citing please include reference
- What is the significance of long-run economic profits, and why can’t the perfect competitor enjoy long-run economic profits, only short-run economic profits?
- Have you paid attention in the news lately about how Epi-Pens have increased from $100 to $600 or 500% markup for a two pack but it looks like Mylan, the company that makes them has the monopoly on this brand. It is a necessary tool to save lives of people with dangerous allergies. The reason it seems like they are taking advantage of citizens is that the drug itself is cheap. That means the rest of the cost comes from the pens themselves. Does it make sense that a pen to inject the medicine should increase in cost so much? What could be done to curb market pricing power in pharmaceutical companies?
- Why can’t the monopolistically competitive firm enjoy long-run economic profits, only short-run economic profits (don’t confuse monopolistically competitive with monopoly)? How are they related to monopolies, hence, MONO in its name?
- The petroleum industry is oligopolistic, meaning there are few producers relatively speaking, and there are high barriers to entry. Moreover, there are long-run economic profits for those firms due to their market power. With that said why do you suppose I filled up my gas tank in 1999 for $.99 per gallon, only to pay $4.15 a little over six years later and 14 years later still around $4.00? What do you suppose happened during that time in which prices rose 300% or more and never looked back? Is it all due to global demand rising?
- Explain the supply curve and how to apply the law of supply. How a firm’ decisions about prices and quantities depend on the market conditions they face.
- What does the term market power mean? Explain the different types of cost; fixed variable, and marginal? Last, how do consumers influence the market price of goods it sells?
- What does the terms price taker and price maker mean and how it relates to the consumer? Also Consider methods to examine the implications of market power.
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