Week 5 Assignment

Week 5 Assignment - create a monopoly situation that would...

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Chapter 11: P. 8 (Page 449) a. It is my opinion that the cost of production will increase. I say this because new firms will enter into the market during a time where other firms are making short run profits. The demand for input factors will increase, and this will become expensive for cost industry. b. Prices will increase because prices are dependent on marginal costs. Prices will also increase as a result of increase in costs of variable and other input. c. Profits will decrease in the long run, and this will result in firms making normal profits. New firms will enter because of current short run profits, and this will increase competition. Chapter 12: P.5 (Page 506-507) To argue that market power does not exist would merely be impossible. However one could argue that market power did not increase as a means to
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Unformatted text preview: create a monopoly situation that would help the consumers. Chapter 13: P.1 (Page 566) It is my opinion that competition along with the price of the soft drink and fries played a part in the disruption of McDonald’s plans. The price of the drink and french fries may have been relatively expensive, so therefore the customers felt as if they were not getting a break in price eventhough the Big Mac was reduced by 75%. Another reason could be based on our society’s health rate. What I mean by this is more and more fast food resturants are becoming more health conscience due to an increase in health conscience people. More fast foods are pushing salads, grilled sandwiches, fruits, and yogurt parfaits as oppose to greasy items like the Big Mac which comes with three pieces of bread, and two pieces of FRIED meat....
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This note was uploaded on 10/06/2011 for the course FINANCE 650 taught by Professor Johndoe during the Spring '11 term at Kentucky.

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