Alligator Sausage Case

1678 Words7 Pages
a. In a highly competitive firm, many buyers and many sellers allow “buyers to expect to find consistently low prices and a wide availability of the good that they want.” Many buyers and many sellers also allows it to where no single firm can influence the market price. Many buyers and many sellers are important because it creates a highly completive market where the price and quantity sold are determined by the conditions of the market rather than by just one firm. b. In a highly competitive firm, similar products allow buyers to find consistently low prices and a wide availability of the good that they want. Similar products also creates it to where firms are price takers because they have no control over the price set by the market. Similar…show more content…
If there was an unlimited supply of alligators in Alabama and the government stopped controlling the number of these hunting licenses, the price of alligator sausage would go down and the quantity would go up. The reason for this is because everyone in Alabama would not need a license and could kill as many alligators as they wished, this would cause a surplus in the amount of alligator sausage on the market causing the price of alligator sausage to plummet because of how much alligator sausage would flood the market. 7. The reason why some economists argue that a government-created monopoly in the medical field can be good for the overall growth on an economy, even though it does create deadweight loss is because a government-created monopoly in the medical field would make large profits due to patents on their drugs, the government-created monopoly will invest into research and development for medical drugs, new technology, and other medical advances because patents create stronger incentives to develop these breakthroughs, this would not exist if market competitors could immediately copy inventions such as medical…show more content…
A restaurant would choose to make most of its profit on alcoholic drinks, yet only break even on food because alcoholic drinks are profitable. In addition, alcoholic drinks also provide restaurants with the means to raise the price of alcohol based on the difficulty to make the alcoholic drink, the entertainment the restaurant offers and the ingredients in the drinks. This allows the restaurant to break even on food because of how much revenue the alcoholic drinks can bring in. 14. Some consumers may believe that when a firm can practice perfect price discrimination, the outcome is less than perfect for the consumer because the consumer could pay more for the product or service than the market value. Another reason why some consumers may believe that the outcome is less than perfect when the firm practices perfect price discrimination is because consumers have different ideas on the amount a product or service is worth. Take for example, a person making minimum wage might think something is worth more than someone who is a
Open Document