Question: Suppose that a college town has a large number of
Suppose that a college town has a large number of firms selling a homogeneous productâ€”pizzaâ€”and that there are two types of consumers in the town. The townâ€™s permanent residents are fully informed about the prices charged by all firms and always shop at the firm or firms with the lowest price. On the other hand, the students attending college in the town (temporary residents) are completely uninformed; they do not know anything about prices and simply choose among firms on a random basis. Explain why, in such a setting, a single price may prevail in the market for pizza.
Answer to relevant QuestionsWhat is a dominant- strategy equilibrium? What is a Nash equilibrium? Is it possible for a Nash equilibrium to exist where neither player has a dominant strategy? Studies have concluded that the deadweight loss of monopoly power in the United States is less than 0.5 percent of GNP. From your knowledge of the determinants of the dead-weight loss, explain why such a small figure is ...Explain what natural monopoly is in terms of the relation-ship between cost curves and the demand curve. If the market is left to itself, what price and output will result?Studies find that controlling for other factors, university professorsâ€™ earnings tend to decline with experience. In other words, the more seniority a faculty member has with a particular institution, the lower his or her ...Economists Ross Eckert and Richard Leftwich have noted that in the early 1950s, over 60 percent of MBA graduates from leading business schools took their first jobs in manufacturing and 10 percent in investment banking and ...
Post your question