assignment#2 ECN203 due 0ct,5 - Xiangying Wu Assignment...

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Xiangying Wu Assignment #2, ECN 203 1. In the context of a free market, patents violate the “nice assumptions”. Nice assumption consists of “no market power” and “no market failure”. However, in this case, once one company is granted patents of the life-saving drug, the other companies can’t produce this product. There will be no equal access to information and equal access to markets. Therefore, patents violate “nice assumptions”. 2. Diamond ring is an example of a price elastic good. That means, if the price of the diamond ring increases, the demand of diamond ring will decrease dramatically. In other word, diamond ring is responsive to the change of its own price. ε = |Percentage Change in Q D | |Percentage Change in P| . The ε(own price elasticity of demand)>1. 3. The graph above is about the relation between the price of chicken and the demand of chicken. Because consumer maximizes utility subject to their budget constraint, MU 1 /P 1 = MU 2 /P 2 = … when the chicken’s price decreases from P
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This note was uploaded on 06/16/2011 for the course ECON 101 taught by Professor Na during the Fall '09 term at University of North Carolina School of the Arts.

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assignment#2 ECN203 due 0ct,5 - Xiangying Wu Assignment...

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