÷÷÷÷÷÷÷÷ . ⾨ 1592=9 㱺 ga - - Fs - - I %- 㱺 E- 㱺 pe = 3 - 2g , - ga - 3 - 2x 's - Is = 'T - Eg - I 㱺 pe pg = 3 - q - 292--3 - F - 2x Is = ¥ 㱺 pa
(j) (6 points) Consider the market for tomatoes, which we assume is a homogeneous product. You have data on the quantity and the price of tomatoes over 100 weeks. You want to estimate the demand function for tomatoes (i.e., the e§ect of price on the quantity demanded). Explain why regressing the observed quantity on the price (and on other demand shifters) by OLS is NOT likely to give you the right price coe¢ cient in the demand function. The market for tomatoes is a homogeneous product , even when we have data on the quantity and the price of tomatoes it is hard to estimate the demand function for tomatoes Regressing the observed quantity on the price is not likely to give us the right price coefficient in the demand function because the result is going to be biased . An alternative solution is to use an IV test .
(k) (6 points) Explain why a high market share does not necessarily mean a high market power (you do not have to cover every aspect of the problem; you can focus on a special case and/ or you can use any example to make your point clear). A high market share does not necessarily mean a high market power because market share does not mean market power . Market share means the share of sales in the market , large firm have bigger market share than smaller firms . Besides , a big market share in a market doesn't mean the same in other markets For example , apple iphones have high market share in the U.S market , because V. S customers like iphones , but they do not have market power of the entire phone market . Other people would buy other phones like Samsung phones , Lot , etc . Big phone market share Apple have in the US does not mean the same in other markets or international market . If a firm has high market power , it could decide to produce less , increase the price , and people would still buy the products - because they don't have other options . Butif Apple for example raises their iphone price really high for stop producing enough iphones for people , they will lose their sales because people will just buy phones from other companies like Samsung , Let , Google , etc .
7/3/19, 6)46 PM HW 1 Page 1 of 4 HW 1 setwd("~/Documents/College/Summer Quarter A-term/Econ 404") df = read.csv("ps1.csv") Question 2 - a df$y = log(df$Y) df$k = log(df$K) df$l = log(df$L) df$phi = log(df$PHI) summary(df) ## Y K L PHI ## Min. : 31.6 Min. : 5.014 Min. : 7.00 Min. :1.001 ## 1st Qu.: 104.9 1st Qu.: 7.575 1st Qu.:28.00 1st Qu.:1.344 ## Median : 156.1
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- Spring '08
- Supply And Demand