Question

When are firms more efficient? Order the following firms from least efficient to most efficient.

Michael opens a food cart serving a type of food that is only slightly differentiate from his nearby competitors'.

Kayla's cranberry bog produces one product and it sells it at market price.

Comcast is the only high-speed Internet provider for a particular urban area.

Javier's shoe store sells many types of shoes and operates with a lot of excess capacity.

Answer 1

The firms that are more efficient ordered from least efficient to most efficient are as follows:

1. Comcast is the only high-speed internet provider for a particular urban area.

Reason: As Comcast is the only high-speed internet provider for a particular scarcity area where it can render the service. But there is the chance of fixing high charges for the consumers. As it can also lead to monopolistic internet provider in one particular area. This also pose the problem to Comcast to make high profit because some consumers have the chance of seeking other internet hub in other urban area which have less service fees.

2. Javier's shoe store sells many types of shoes and operates with a lot of excess capacity.

Reason: Javier's idea of increasing the capacity of producing more shoes is appreciable one. But before increasing the quantities of the shoes, Mr. Javier should have done the field study of research of the market interest of his branded shoes and also the factor of consumers wish and the ability of purchasing such goods are need to be considered before increasing the capacity of the shoe products.

3. Michael opens a food cart serving a type of food that is only slightly differentiate from his nearby competitors.

Reason: Michael runs its food card only under perfect competition. All identical food products are only sold here. Though slight modification in the taste and preparation of the food will not boost the sales of his products.

4. Kayla's cranberry bog produces one product and it sells it at market price.

Reason: Kayla produces single product for marketing purpose. Kayla also not using excess potential of resources to produce additional produce of goods which in turn divided the profit margin sharing. It also, determines the market price in order to earn the reasonable profit margin not attracting towards monopoly features connecting with the sale of produce of the Kayla products.