Econ_274_Fall_2011_PS_1 - Explain 3 A lobbyist claims that...

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Econ 274 Fall 2011 Problem Set 1 Glandon Due: Friday, September 9 by 5:00 PM 1. Suppose that production of a particular good uses a technology that results in a large fixed cost and constant marginal cost for all levels of production. Would you expect to see many or few firms in this industry? Explain. 2. A researcher observes that a particular industry consists of many small firms. What are some reasonable conclusions you might draw about the behavior of cost in this industry?
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Unformatted text preview: Explain. 3. A lobbyist claims that the market demand elasticity for apples is -0.20 (Carlton and Perloff p.69), which is quite low. He concludes that since consumers are not very responsive to price that the price for apples must be very high relative to the cost of producing them and that the industry should be regulated. Is his argument sound? Explain. 4. Carlton and Perloff Chapter 3, Problems 2, 4, and 6....
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