Economics Homework Nine Answers - Student Nine
Economics homework 9
1. The Airliner building industry is an oligopoly. There are few companies, the two major ones being Boeing and Airbus; it is very difficult to start a new company; and the airplanes are mostly similar.
- Superb examples.
2. Perfect Competition; Perfectly Contestable Markets; Monopolistic Competition; Oligopoly; Cartel; Monopoly.
3. 1) Monopolistic Competition
2) Perfectly Contestable Markets
- Hmmm, I think #2 is perfect competition. Why else would such aggressive advertising be used? (Minus 1).
4. 1) Governments sometimes create monopolies by operation of law.
2) Economies of scale sometimes create a monopoly.
3) Control of a valuable resource can produce a monopoly.
4) Governments can grant monopolies by issuing patents and copyrights.
5) The licensing of professionals can sometimes create a barrier to entry.
5. The law of demand prevents a monopoly from increasing its prices without limitation. Despite the fact that a monopoly has no competitors, the law of demand still applies because some people will start buying substitutes.
- Excellent ... but note that there are no perfect substitutes. The income effect is more important here than the substitution effect, with respect to the Law of Demand.
- Great work. 39/40.--Andy Schlafly 22:53, 15 November 2009 (EST)