- Manager A suggested that in order to cope-up with the demand for their product, they need to accumulate all the capital that they could in relation to their budget. Is this proposal reasonable? Analyze using economic context.
Group of answer choices
Yes, this will improve the capacity of the firm, as such, Supply will match Demand
No, this will increase cost of labor
Yes, as this will give them superior advantage since their competitors will not be able to refresh their capital if their machines wore-out
No, because according to Marginal Product of Capital, there is a limit to how much capital a firm can buy, and as such, any additional purchase will not add new output and will just be additional cost
- Oligopoly and Monopolistic Competition provide technological innovation and variety of products which might not happen under a Monopoly or even in perfectly competitive environment. With that said, you could say that these market structures will provide highest consumer welfare based on consumer surplus. T/F?
- You and your friend wanted to start a cartel. If so, what is the best product to produce so that your cartel will be successful.
Group of answer choices
Products with high substitute
Products that are highly elastic
Products that are present in a contestable market
Unique product with low substitutes
Yes, as this will give them superior advantage since their competitors will not be able to refresh their capital if their machines wore-out
No, because according to Marginal Product of Capital, there is a limit to how much capital a firm can buy, and as such, any additional purchase will not add new output and will just be additional cost