The simple case of pricing with market power assumes (a) all consumers are charged the same...

The simple case of pricing with market power assumes (a) all consumers are charged the same price, (b) the firm sells one product, (c) demand exists in one time period, and (d) competitors do not pursue pricing games. Discuss what happens as each assumption is relaxed.

Expert Solution

a) Economic analysis tells us how markets efficiency And conditions under which the efficiency is maximized.

The, ideal world is efficiencies maximum ,as in the simple case off market for honour play.

b) such a model is based on simple assumption, which may not be realstick. The result Kandi model serve as the'benchmark'against which real life unrealistic results can be measured.

For this comparison it's important know which assumption has been violated.

C) this allows economists violation at a time.

The analysis of source of the deviation from ideal world is possible only after the source has been identified.

This is possible only if we have list of source in the form of assumption.

d) each assumption is a source of deviation from ideal results in the world.

We can pinpoint the source off deviation from ideal results real world.

If we can pin point the source of the deviation we better equipped to deal with it and resolve it to achieve efficiency.

Each assumption leads to an ideal benchmark against which actual results are compared the deviations in the salt can be identified and rectified only so are clearly laid out as assumptions. Reason why's we need assumption in a model, even though they maybe unrealistic.

Note: please give like didn't dislike loose my job save me thnks...

Rahul Sunny answered 8 months ago

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