1. You\'re visiting the pyramids of Teotihuacan, near Mexico City. As you walk b

Question

1. You're visiting the pyramids of Teotihuacan, near Mexico City. As you walk by the pyramids, several artisans approach you with their products - hand carved obsidian goods. As you walk, you notice no real difference between the goods - the obsidian turtles mostly look like turtles, the necklaces are made of the same leather... you decide to learn how to hand carve these goods, and sell them. As it turns out, you can learn in only a couple of days, and the startup costs are only a block of obsidian...

What kind of market is this? Why (list the properties of the market)? At what price could you sell your obsidian products? Could you decide the price?

2. Find a company who is or was a monopoly. Tell us any inefficiencies that the company suffers due to being a monopoly. Who sets the price in this case? Remembering back to last week's discussions - I asked you who sets the price in a perfect competition, and some of you answered that you do decide the price - in perfect competition the market decides the price (in other words the buyers), not the sellers. But in the case of monopolies, who decides the market price of the products?

3. Name a case of price discrimination. Can you resell the product after purchasing it? Lastly, can you explain why it is that first class costs so much on airplanes, why it is that economy class is getting more and more uncomfortable? (Hint: look up United's "Economy Plus")

4. When does entry into a monopolistic competition stop? What deters entry in this case?

5. Find a company that operates in monopolistic competition, and compare the 4 features of a monopolistic competition to the company (number. of buyers, number of sellers, differentiated product, and barriers to entry).

Explanation / Answer

A the market is perfect competition because there are many sellers who sell same product and entry is almost free. We can sell at running price and can't decide price of the product

B comcast corporation. Its Internet speed is much slow than in other advanced countries like France and South Korea and it's price is many times larger than Indian counterparts like jio or French counterparts. Monopoly I. e seller decides price.

C Different electricity charges for industrial and home purposes is case of price discrimination. It is seldom possible to sell good after purchase because of physical barriers, laws favouring monopoly etc. First class costs so much because of price discrimination. There the demand curve is less elastic. Economy class is getting more and more uncomfortable because the monopolist wants to differentiate products and in this process economy class is sold as inferior quality product to differentiate it from economy plus

4 when economic profits fall to zero in the long run.Entry is deterred by customer loyalty, higher costs of entry etc

Can answer only 4 parts according to chegg policy. Please send other parts as separate question

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