Question

please needed immediately

short question answers

1 Suppose a social planner is able to decide whether a particular industry will operate under a perfectly competitive market structure or a monopoly.

1. (8 points) Explain how the outcomes under these two market structures typically differ and make a suggestion to the social planner about which one to choose based on your answer.
2. (2 points) Suppose the social planner tells you that, given the particular circumstances in this market, the total quantity produced under the two scenarios would be the same. What could those circumstances be? Explain

2

A pharmaceutical company sells a patented drug in only two countries at significantly different prices. The two countries are considering passing a common law stating that the pharmaceutical company cannot charge different prices in the two countries. An adviser states that this policy could backfire. Explain the possible consequences of this policy and how it could backfire.

mupltiple choice

1. When firms price discriminate they

Select one:

a. get additional surplus from consumers who would have bought at the profit-maximizing uniform price but lose sales because of the higher prices.

b. maintain surplus from existing consumers but pick up additional consumers that would not have bought at the profit-maximizing uniform price.

c. get additional surplus from consumers who would have bought at the profit-maximizing uniform price.

d. None of the above.

2.

Which of the options below better describes price discrimination?

Select one:

a. selling more than one version of a product.

b. selling a product at the same price to each and every consumer.

c. selling a product at more than one price.

d. selling a product at its marginal cost plus a markup.

e. producing goods and services for sale within the firm.

Answer 1

Case no. 1

In the given situation wherein the social planner is concerned for deciding either of market scenario that is perfectly competitive market structure or monopoly market structure. As by the names there are many various differences in between them.

1.perferctly competitive market is fair and practical market situation in today's generation , whereas monopoly market is based on unrealistic assumption and practicall not possible.

2. In perfect competitive market there are many numbers of buyers and sellers , whereas in monopoly market there is only one seller and many number of buyers.

3. Demand is perfectly elastic in perfect competitive market , whereas in in monopoly market the demand is inelastic.

4. In perfect competitive market there is no control on supply whereas in Monopoly there is an absolute control of supply.

5. Perfectly competitive market has pricing depending on the market , whereas the monopoly market has pricing depending solely by the person.

6. Perfect market has a horizontal vertical demand line , whereas the monopoly has downward sloping demand curve.

7. In perfect market the profit is normal due to the pricing , whereas in monopoly there is excess profit.

Providing pointwise explanation of these markets as per my suggestion to social planner I would suggest him to operate for perfectly competitive market as it is a realistic market assumption in today's era.

Case no.2

This situation describes about the patented product of a company selling it in 2 different countries.

As the advisor suggests that filling a complaint against the country for price differentiation could backfire as per my knowledge. The major reason being rights of patented products as well as if there are any international treaty between the country's then the patented product company can offer at a lower price to maintain the treaty terms and conditions.

1.When firms price discriminate

C.get additional surplus from consumers who would have bought at the profit-maximizing uniform price.

2. Price discrimination means :

C. selling a product at more than one price