Có 40+ tài liệu thuộc chủ đề "in the overall economy"
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production, the value of the aluminum to consumers (as measured by the height of the demand curve) exceeds the social cost of producing it (as measured by the height of the social-cost curve). The planner does not produce more than this level because the social cost of producing additional aluminum exceeds the value to consumers.. Note that the equilibrium quantity...
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achieve any point on the demand curve either by setting a price with a Pigovian tax or by setting a quantity with pollution permits.. But, because the EPA does not know the demand curve for pollution, it is not sure what size tax would achieve that goal. The auction price would yield the ap- propriate size of the Pigovian tax.....
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Because knowledge is a public good, profit- seeking firms tend to free ride on the knowledge created by others and, as a result, devote too few resources to the creation of knowledge.. The inventor thus obtains much of the benefit of his invention, although certainly not all of it. The government tries to provide the public good of general knowledge...
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Yet hunting the buffalo was so popular during the nineteenth century that by 1900 the animal’s population fell to about 400 before the government stepped in to protect the species. In some African countries to- day, the elephant faces a similar challenge, as poachers kill the animals for the ivory in their tusks.. The cow, for ex- ample, is a...
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storekeeper an extra amount that the storekeeper remits to the government. (Some states exclude certain items that are considered necessities, such as food and cloth- ing.) Property taxes are levied as a percentage of the estimated value of land and structures, and are paid by property owners. Together these two taxes make up more than a third of all receipts...
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Tax incidence—the study of who bears the burden of taxes—is central to evaluat- ing tax equity. As we first saw in Chapter 6, the person who bears the burden of a tax is not always the person who gets the tax bill from the government. As a result, they affect people beyond those who, according to statute, actually pay the...
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Similarly, when Helen hires workers to make the cookies, the wages she pays are part of the firm’s costs.. An important implicit cost of almost every business is the opportunity cost of the fi- nancial capital that has been invested in the business. $15,000 is one of the implicit opportunity costs of Helen’s business.. In this section we examine the...
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In the range of output from 0 to 4 bagels per hour, the firm experiences increasing marginal prod- uct, and the marginal-cost curve falls. After 5 bagels per hour, the firm starts to ex- perience diminishing marginal product, and the marginal-cost curve starts to rise.. This combination of increasing then diminishing marginal product also makes the average-variable-cost curve U-shaped.. Marginal...
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a m a r k e t If your local gas station raised the price it charges for gasoline by 20 percent, it. By contrast, if your lo- cal water company raised the price of water by 20 percent, it would see only a small decrease in the amount of water it sold. As you might expect, this difference in...
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That is, a firm chooses to exit if the price of the good is less than the average total cost of production.. The firm will enter the market if such an action would be profitable, which occurs if the price of the good exceeds the average total cost of production. The criterion for entry is exactly the opposite of the...
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Thus, for these two reasons, the long-run supply curve in a market may be up- ward sloping rather than horizontal, indicating that a higher price is necessary to induce a larger quantity supplied. Because firms can enter and exit more easily in the long run than in the short run, the long-run supply curve is typically more elastic than the...
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If the mo- nopolist raises the price of its good, consumers buy less of it. Looked at another way, if the monopolist reduces the quantity of output it sells, the price of its output increases.. 2 gallons, it must lower the price to $9 in order to sell both gallons. And if it produces 3 gallons, it must lower the...
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The lawyers and economists in the Department of Justice might well decide that a merger between these two large soft drink companies would make the U.S. soft drink market substantially less competitive and, as a result, would reduce the economic well-being of the country as a whole. The government derives this power over private industry from the antitrust laws, a...
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Thus, it would not be surprising if legislative action leads soon to a deterioration of the cable com- panies’ monopoly power. Moreover, the universities have more or less successfully applied a high moral tone to the process: Rich appli- cants—especially smart rich applicants—. In any event, the universities’ envi- able cartel position has been damaged by the unenlightened Justice Depart-...
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(Do the approximately dozen companies that now sell cars in the United States make this market an oligopoly or more competitive? The answer is open to debate.) Similarly, there is no sure way to determine when products are differenti- ated and when they are identical. In the next chapter we analyze monopolistic competition. Each Saturday, Jack and Jill decide how...
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Just as self-interest drives the prisoners in the prisoners’ dilemma to confess, self-interest makes it difficult for the oligopoly to maintain the cooperative outcome with low production, high prices, and monop- oly profits.. We have seen how the prisoners’ dilemma can be used to understand the problem facing oligopolies. Here we consider three examples in which self-interest prevents cooperation and...
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At stake was the future of one of the world’s most valuable companies (Microsoft) in one of the econ- omy’s fastest growing industries (computer software).. A central issue in the Microsoft case involved tying—in particular, whether Microsoft should be allowed to integrate its Internet browser into its Windows operating system. The government claimed that Microsoft was bundling these two products...
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As in a monopoly market, price exceeds marginal cost. This conclusion arises because profit maximization requires marginal revenue to equal marginal cost and because the downward sloping demand curve makes marginal revenue less than the price.. As in a competitive market, price equals average total cost. Because a monopoly is the sole seller of a product without close substi- tutes,...
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The theory of monopolistic competition seems to describe many markets in the economy. From the standpoint of the economic theorist, the allocation of resources in monopolistically competitive mar- kets is not perfect. That is, it operates on the downward-sloping portion of the average-total-cost curve. In addition, the number of firms (and thus the variety of products) can be too large...
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W H AT C A U S E S T H E L A B O R D E M A N D C U R V E T O S H I F T ? We now understand the labor demand curve: It is nothing more than a reflection of the value of marginal product of labor. With this...