11.4.10 Econ

11.4.10 Econ - Notes Econ Would you rather buy form open...

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11/4/2010 Notes Econ Would you rather buy form open market or from a cartel? If market was run by a cartel then price would be increased and quantity would be reduced. If your normative goal is to have a economy that benefits consumers than have laws that restrict cartels Conscious parallel behavior = “I have a pretty good idea that my 4 rivals are going to do this” - somehow the prices drop to a certain level without collaboration that’s why it’s very hard for anti-trust laws to convict businesses for forming cartels (cartels are illegal in the US) BTE = barrier to entry, which will help you make a lot of money in the business world If there are barriers of entry then firm’s elasticity is extremely inelastic because consumers only come to you to buy the product. Your product has become commoditized. If new firms are entering then your demand curve has become more elastic and demand shifts to the left because consumers have more alternatives to select from. More economic profit in the long-haul = more barriers of entry in your industry
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This note was uploaded on 02/24/2011 for the course ECON ECON 201 taught by Professor Elzinga during the Spring '09 term at UVA.

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11.4.10 Econ - Notes Econ Would you rather buy form open...

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