Question 3:

What are the determinants of demand for labor and supply of labor? How the equilibrium wage rate is determined in labor market? Why a janitor gets lower wage than a heart surgeon? Explain

Question2:

1. Elaborate the three most important characteristics of an oligopoly market. Give three examples of oligopolistic industries in Saudi Arabia.
2. What is a patent? If a patent serves as barrier to entry, why do governments issue patents?

calculate the Gini Index of the following income distribution of 10 people:

10,10,10,10,10,10,10,10,50,100

Question 1 :

1. What effect does the entry of new firms have on the economic profits of existing firms in a monopolistically competitive market? Elaborate your answer with appropriate examples.
2. Why a firm remains in business even by earning zero economic profit? Elaborate your answer.

Question2:

1. Elaborate the three most important characteristics of an oligopoly market. Give three examples of oligopolistic industries in Saudi Arabia.
2. What is a patent? If a patent serves as barrier to entry, why do governments issue patents?

Question 3:

What are the determinants of demand for labor and supply of labor? How the equilibrium wage rate is determined in labor market? Why a janitor gets lower wage than a heart surgeon? Explain

Question 4: Why some governments resort to price ceiling and price floor for some goods and services? Describe three most important disadvantages of price ceiling and price floor? In what conditions do you think that price ceiling and price floor may contribute to welfare of people?

Expert Answer

• Sayantan Banerjee answered this

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  AS PER CHEGG POLICY, I CAN ONLY ANSWER THE 1ST QUESTION

  In a mopolistically competitive market, firms are not price takers. They are price makers. So they decide their own price. So in the short run, firms can have supernormal profits. That is they can set any price they want to and get high economic profits. However, since the market is very much price elastic, so unless the product is differentiated, it is not possible to continue this supernormal profits.

  Here we now consider multiple firms whose products are not similar but very near substitutes.

  Now let's say there is a new entrant in the market. The barriers to entry are quite low. So they can easily enter the market. What is the incentive of a new entrant? Since the economic profits are very high, a new firm is enticed to join the market.

  As they join the market, the quantity of products in supply increases. This leads to a lowering of the supply curve. Due to this, the equilibrium price will also go down. Now since the cost of production remains the same, the economic profit of the firm goes down.

  So with each new entry in the monopolistically competitive market, the economic profit of all the firms go down to a point where the economic profit is zero.

  At this point of time, no new firms have any incentive to join the market as they would not get any profit. In spite of that, let us consider that some firm joins. This reduces economic profit from 0 to negative for all the firms. As a result, firms will start to leave the market. If more than one firm leaves, the profits go up and become positive. This creates space for new entries. So the number of firms goes on increasing or decreasing as the case may be till they converge to a optimal number where the economic profit is zero.
  
  
  So if a new firm enters a monopolistically competitive market, in the short run, the economic profits of all the firms decrease and in the long run they become zero.

  Let us consider an example of restaurants. There are many restaurants and infinite customers. The restaurants have priced their food such that they make an economic profit EP. Now there is a new entrant. They price their food lower(to attract customers) and their food is a good substitute of what is available in the market. SO people will start moving to them. Now either they increase prices to reap more profit, or if they have the bandwidth to accomodate the increased rush, they keep on getting customers. This leads to other restaurants to lower their prices as well or face losses. Thus the overall market has a lower price. this means the economic profit for all the firms have gone down.

  Now there is another newer entry at a lower price. So other players can also start undercutting their food prices.

  These new entrants keep on coming and thus prices keep getting lowered till one restaurant has reached the point of Zero Economic Profit. No restaurant will be able to cut prices beyond this point. So All restaurants will converge to this price point to get a level playing field. Thus in the long run, the economic profit becomes zero.

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Answers from our experts for your tough homework questions

Question2:

1. Elaborate the three most important characteristics of an oligopoly market. Give three examples of oligopolistic industries in Saudi Arabia.
2. What is a patent? If a patent serves as barrier to entry, why do governments issue patents?

Question 4: Why some governments resort to price ceiling and price floor for some goods and services? Describe three most important disadvantages of price ceiling and price floor? In what conditions do you think that price ceiling and price floor may contribute to welfare of people?

Try to organize what we understand capital to be based on the different readings in the course. Try to explain why we keep inventing new forms of capital such as human capital, social capital, and cultural capital. (2-3 pages) (cite your sources do not plagiarize)

Fiscal policy impact of the Carter and Reagan administrations. Did the GDP, unemployment rate and inflation increased or decreased. And by what percent

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Question Briefly explain why education confers positive externality. Depict the market for education where social benefit exceeds private benefit. Explicitly show the equilibrium and socially optimal quantities.

Define and discuss the IPAT relationship (I = P x A x T) as an indicator of humanity’s environmental impact on the planet. Include in your answer some key issues concerning each of the right-hand variables (P, A and T), and the complexities they present for an IPAT assessment.

It is 2020. The US government has passed a new federal minimum wage of $11.00/ hour. It will go into effect on January 1, 2021. Please follow the instructions, given the background information in items A, B, C, and D below.

Instructions

1. Calculate the immediate financial impact in 2021 (change in hourly wages) on the profitability of the company due to the impending increase in the minimum wage. Ignore tax issues such as employment tax in your calculation.

2. Identify at least three (3) courses of action (options) for the owner of this company that will offset the increase in labor costs from #1 above. Explain why you think these options are viable options for the small company. Your course of action must quickly offset the effect of the increase in wages and the decrease in profitability of the company due to the minimum wage increase.

3. Lastly, recommend the one course of action from among your list of three courses of action that you think is the best option for the small business owner and his or her company. Justify your response.

Background Information

A- The company has 19 employees, which includes two assistant managers. The owner is the only shareholder of the company.

B. 6 employees earn $8.00/ hour which is slightly above the current federal minimum wage, but $3/ per hour below the new federal minimum wage.

C. The other employees earn the following:

ii. 6 earn $13/ hour

iii. 3 earn $18/ hour

iv. 2 earn $22/ hour

v. The 2 managers each earn $50,000 per year

See Table 1 on the next page.

D. The company earned a profit last year of $100,000 based on sales of $1,500,000 that was passed through to the owner as the owner’s only source of income.   This year sales are on track to be approximately $1,500,000 again due to industry conditions. The owner’s family just bought a new house for their growing family and has a mortgage of $141,000 with monthly payments of $1,008 per month.

E. The owner’s spouse does not work and the family cannot justify the spouse getting a job of any kind because the wages from a new job would not cover the weekly cost of day care and after school care for the family’s three young children, ages 2, 5, and 7.

Table 1. Summary of Current Costs of Payroll

What makes a firm truly 'global' in its outlook?