1. Explain the difference between a policy protecting competition and a policy p
ID: 1208223 • Letter: 1
Question
1. Explain the difference between a policy protecting competition and a policy protecting competitors. Use examples to illustrate your explanation.
2. Using marginal analysis, explain the concept of optimal pollution (or optimal abatement). Explain why different individuals might have different estimates of the marginal benefits of abatement (or the marginal costs of pollution), and why that might lead to very different views on where the optimal level of pollution/abatement was.
3. What is the difference between absolute and relative poverty? What would the government have to do to eliminate absolute poverty? What would the government have to do to eliminate relative poverty? How might such policies affect incentives to work? Explain the possible tradeoffs between efficiency and equity.
4. Explain and give at least 3 examples of risk vs. return tradeoffs in financial markets and asset management.
5.Government action is often proposed as a response to market failures. Give 3 examples of market failures and the government action that might address that market failure. Under what circumstances and why might government action “fail”?
Explanation / Answer
Multiple questions asked.
Q1 is answered below.
1.
Policy protecting competition: This refers to adopting policy measures to control mergers and concentration of power and promoting healthy competition in the industry.
Policy protecting competitors: This refers to adopting policy measures to protect firms from their competitors and discourage any unhealthy or inappropriate step to be taken by any firm's competitors.
E.g. policy action to discourage patents, or mergers is a policy protecting competition, and an action to protect firms form price wars among competitors is a policy protecting competitors.
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