Examining Practice Of Price Discrimination Economics Essay

Examining Practice Of Price Discrimination Economics Essay Perfect competition is the most efficient market structure because, in the long run, each firm in the market will be producing at its minimum average cost, or per-unit. This means that consumers get desired goods and services at the lowest possible prices, and also that the firms are economizing on societys scarce resources to the greatest extent possible. What is the difference between the concepts of diseconomies of scale, and the law of diminishing return? (4 marks) Law of diminishing return occurs in the short-run when one factor is fixed. If the variable factor of production is increased, there comes a point where it will become less productive and therefore there will eventually be a decreasing marginal and then average product. When long-run average total cost rises as output increases, there are said to be diseconomies of scale. a. Sally owns a ceiling fan company. Last year, she sold 1000 ceiling fans at $50 each, and each fan cost her $20. Before going into the ceiling fan business, she worked as a fan-dancer at $25,000 a year. She used her own money to buy the fans by withdrawing the money from her savings account where it was earning five percent annual interest. Calculate Sallys economic profit and her accounting profit. Should Sally continue with her ceiling fan business? Explain. (6 marks) If her economic profit is at least zero, Sally should stay in business. Her TR = $50,000 and her total accounting cost is $20,000, for an accounting profit of $30,000. She forgoes interest on savings of $20,000 (.05) = $1,000 as well as forgone earnings of $25,000. This leaves $4,000 in economic profit, so she should stay in business. Bob Edwards owns a bagel shop. Bob hires an economist who assesses the shape of the bagel shops average total cost (ATC) curve as a function of the number of bagels produced. The results indicate a U-shaped average total cost curve. Bobs economist explains that ATC is U-shaped for two reasons. The first reason is the existence of diminishing marginal product, which causes it to rise. What is the second reason? Explain your answer. Assume that the marginal cost curve is linear. (4 marks) Average fixed cost always declines as output rises because fixed cost is being spread over a larger number of units, thus causing the average total cost curve to fall. a. Provide two circumstances in which monopoly may offer efficiency advantages over competition. (4 marks) A monopolist might be better positioned to exploit economies of scale leasing to an equilibrium which gives a higher output and a lower price than under competitive conditions. As firms are able to earn abnormal profits in the long run there may be a faster rate of technological development that will reduce costs and produce better quality products for consumers. This is because the monopolist will invest profits into research and development to promote dynamic efficiency. Explain the practice of tying and discuss why it is controversial. (5 marks) Tying is the practice of bundling goods for sale. It is controversial because it is perceived as a tool for expanding the market power of firms by forcing consumers to purchase additional products. However, economists are skeptical that a buyers willingness to pay increases just because to products are bundled together. In other words, simply bundling two products together doesnt necessarily add any value. It is more accurately believed to be a form of price discrimination. Describe the source of tension between cooperation and self-interest in a market characterized by oligopoly. Use an example of an actual cartel arrangement to demonstrate why this tension creates instability in cartels. (5 marks) The source of the tension exists because total profits are maximized when oligopolists cooperate on price and quantity by operating as a monopolist. However, individual profits can be gained by individuals cheating on their cooperative agreement. This is why cooperative agreements among members of a cartel are inherently unstable. a. If the average total cost curve is falling, what is necessarily true of the marginal cost curve? If the average total cost curve is rising, what is necessarily true of the marginal cost curve? (5 marks) When average total cost curve is falling it is necessarily above the marginal cost curve. If the average total cost curve is rising, it is necessarily below the marginal cost curve. Describe the difference between average revenue and marginal revenue. Why are both of these revenue measures important to a profit-maximizing firm? (5 marks) Average revenue is total revenue divided by the amount of output. Marginal revenue is the change in total revenue from the sale of each additional unit of output. Marginal revenue is used to determine the profit-maximizing level of production and average revenue is used to help determine the level of profits. Describe the process by which the market for capital and the market for land reach equilibrium. As part of your description, elaborate on the role of the stock of the resource versus the flow of services from the resource. (6 marks) Equilibrium in the markets for land and capital are governed by the value of marginal product for these factors relative to their supply. One difference between these markets and the market for labor is the distinction between rental value (flow) and purchase price (stock). This difference is reconciled by noting that in efficient markets, the purchase price should reflect the value of the stream of services provided by the land or capital (or the sum of rental values appropriately discounted). a. List and explain two conditions necessary for firms to be able to successfully practice price discrimination. (2 marks) Differences in price elasticity of demand between markets: There must be a different price elasticity of demand from each group of consumers. The firm is then able to charge a higher price to the group with a more price inelastic demand and a relatively lower price to the group with a more elastic demand. By adopting such a strategy, the firm can increase its total revenue and profits. To profit maximize, the firm will seek to set marginal revenue = to marginal cost in each separate (segmented) market. Barriers to prevent consumers switching from one supplier to another: The firm must be able to prevent market seepage or consumer switching defined as a process whereby consumers who have purchased a good or service at a lower price are able to re-sell it to those consumers who would have normally paid the expensive price. This can be done in a number of ways, and is probably easier to achieve with the provision of a unique service such as a haircut rather than with the exchange of tangible goods. Seepage might be prevented by selling a product to consumers at unique and different points in time for example with the use of time specific airline tickets that cannot be resold under any circumstances. Explain how each of the following industries practices price discrimination: (6 marks) restaurant Restaurants sometimes have childrens menus. It can be profitable if adults who come to restaurants with children are, on the average, more sensitive to prices on menus than adults who come to restaurants without children. Children often do not value restaurant food and service, and often waste a large part of their food. Parents know this and do not want to pay a lot for their childs meal. If restaurants treat children like adults, the restaurants may lose customers as families switch to fast-food restaurants. If this explanation is correct, then restaurants price discriminate. airline Airlines charge different prices for seats on the same plane, depending on when the ticket was purchased, how long the traveler will be staying at the destination, etc. Of course, the cost of operating the plane is independent of these variables. Hairdresser A hairdresser may charge a lower price to children than to adults. The reason they do this is that they believe children to have a differing elasticity of demand to adults. In other words, the price needed to maximize revenue from children is not the same as the price needed to maximize revenue from adults. By charging different prices they will maximize revenue from both groups Calculate the total revenue without price discrimination as well as with price discrimination, and complete the table with your calculations. (4 marks) Price Qd TR TR (with perfect price discrimination) 30 0 22 10 220 220 14 16 224 304 10 24 240 464 7 38 266 562 Briefly describe the characteristics of each of the following market types. Give an example of each market type. (8 marks) pure competition The goods being offered for sale must all be the same. The buyers and sellers must be so numerous that no single buyer or seller influences the market price. Buyers and sellers are price takers. An example would be the wheat market. Monopoly A monopoly is a market in which there is only one seller and the seller sets the price of the product, given the demand curve for that product. An example would be a local cable television company. Oligopoly An oligopoly is a market in which there are only a few sellers, and the sellers do not always compete aggressively. An example would be airline routes. monopolistic competition Monopolistic competition is a market containing many sellers offering slightly different products. Because the products are not the same, sellers have some ability to set price. An example would be the software industry. Use the graph below to explain why a profit-maximizing monopolistically competitive firm must operate at excess capacity. Why is a perfectly competitive firm not subject to the same constraint? (6 marks) Competitive firms do not face downward-sloping demand. The graph shows the firm choosing a level of production in which the intersection of marginal revenue and marginal cost occurs at an output level where average total cost is decreasing. This profit-maximizing output level is less than the efficient scale (minimum of average total cost) and therefore the firm is said to be operating at excess capacity. If the monopolist depicted in the graph below sets a price of $10 and sells 100 units, the corresponding marginal revenue is $5 and marginal cost $3. What recommendation regarding price and quantity would you give this monopolist? Explain your answer. (6 marks) Since MR exceeds MC, recommend an increase in output. Greater sales will require a price reduction. So reduce P below $10 and increase Q above 100. The marketing division of a firm has measured demand for its product and reports that it is Q = 24 P, where Q is units and P is price per unit in dollars. The cost is given in the table below. Complete the table and determine the profit-maximizing level of output for this firm. (6 marks) As indicated in the table below, the optimal output is Q = 5, where MR = MC = 5.80. Output Total Cost Price Revenue Profit 0 10 24 0 -10 1 18 22 22 4 2 20 20 40 20 3 22 18 54 32 4 25 16 64 30 5 29 14 70 41 6 34 12 72 38 7 40 10 70 30 8 48 8 64 16 Define the following terms and explain their importance to the study of economics. (9 marks) barriers to entry Barriers to entry make it difficult or impossible for other firms to enter an industry, thus allowing monopoly to continue to exist. Some examples of barriers include legal restriction on entry, patents, control of scarce resources, large sunk costs, technical superiority, and economies of scale. Patent A patent is a government-granted legal monopoly given to the inventor of a new product or process. During the life of the patent, the firm has a protected monopoly position. Thus, it serves as a barrier to entry. natural monopoly A natural monopoly is an industry in which advantages of large-scale production make it possible for a single firm to produce the entire output of the market at lower average cost than a number of firms each producing a smaller quantity. Most natural monopolies are regulated utilities.

Modernism and the Visual Arts Essay

Originally titled as Le Bain, means the bath; Luncheon on the Grass was exhibited at the Salon de Refuses in 1863. It is painted with oil on a large canvas by Édouard Manet created in between 1862 and 1863. The painting represents the contrast between a female nude with fully clothed men in a rural setting. By that time, normally woman in paintings didn’t look at viewers straight, especially with nudes. Traditionally, nude models mostly looked away from the view. But however, Manet’s naked female model straightly stares at the viewer. This was shocking, but also challenging at the same time. The Luncheon on the Grass, received a great attention by causing public scandal with nude female and painting was success through setting, color, technique, composition and light. Luncheon on the Grass brought in much argument at its reveal. From this painting, the viewer is provoked by a naked female directly looking at the audience. By this time, this naked woman was obviously politically improper and especially, woman looking at the viewer as unashamed was totally unbelievable and offensive in a male-controlled, conquered society. This was the main reasons why it was forbidden and got teased from the public. Not only because picture of the naked female, but it was a commentary, and arguable as well. Painting it makes seem usual, and normal, besides something with sexualized. However, the two fully clothed men are not looking directly; it is only the naked female who grabs attention to be focus of the painting. Once again, the setting is very unusual, and it is unique. It seems like the models are just posing instead of having lunch together. The picnic basket lies on its side in the corner without any attention, and also the naked female has been completely left out along. The woman in far back in lake also seems left out from the lunching group too. None of these people seems gathered in the nature. However, some critics have inferred the painting as oddness with compositional sense, but it is delightful with the thought of the illusory. Manet’s use of color was influenced by the Impressionist movement, and it led the painting successful. Manet’s color use is combined with a very practical theme. He used mostly dark colors for the foreground such like dark greens, orange-browns and blacks for outlines. He also broke up of the movement of figure to add reality. Manet also inserted element of still life which is picnic basket in the bottom left corner of the painting. It subsidizes an added level of color. What is interesting in this painting is that he limited to use warm colors. And instead of having soft brush strokes and color mix, he uses vivid outlines around the figure. This concept lets the figure pop out of the landscape. Looking at the female figure, Manet painted in a flat tone with very little shading to capture the moment. The painting contains flat areas of color, and even in some places, Manet left it as a bare canvas. With limited of shading and contrast using of cool and warm colors prevent the tradition of depth and volume; also cause viewer’s attention to the surface of the painting. Manet’s light source through the painting was also interesting. This impression era is covered by the use of broad and detailed light source, which limits almost no shadows. However, the lightning in this scene of painting is unreliable and unusual. Compare to the two clothed men, the nude female takes the spotted light. She almost has no shadows besides strong outlines. Also because the two clothed men are wearing dark clothes, the nude female obviously pops out from the background and grabs viewers’ attention. I can see where the light hits in different areas, but the nude female takes the main light source, and therefore, the landscape background smoothed out the light. Tradition to this time era, Manet’s techniques were extraordinary and brush strokes become much less developed. Most of his brush strokes have been done in free handed. Focusing on the nude female, her skin is not smoothed out with value of color and brush techniques. Also the background is containing a rough brush strokes. During this time period, most of the artists are hiding brush strokes for their technique, but Manet did the opposites. It is obvious to see each brush stroke in nude female giving a rough complexion. In the background, also this style of rough brush strokes are made noticeable, and this even seems unfinished. Manet was free with technique. He did not try to hide or to follow the trends; indeed, some scenes in the painting seem unfinished. Through the composition, the figures are positioned in central. The interesting thing is that through this composition, I can draw myself a direct pyramid from. From the foreground nude female figure rises up to the lady in the water. With this compositional sense, attention falls between the two men. Men seem very odd and just stuck to be posing because compare to the women two men seems very dull and not interested in. They were not paying attention to the woman, and also not gathered at all. None of the figures seems relaxed. Rather than posing natural in the nature, these figures give tightness look. However, Manet successfully balanced the light against dark, use of cool color background and well blends the nude figure with warm tone, covers up the oddness and conveyed as successful painting. To sum up, Manet’s Luncheon on the grass is with mystery, oddness and wonder. He detailed his idea to the work, and all the elements he included in this painting lead great result follow in 1863. As an impressionist, Manet earned great media attention by causing public scandal and painting was success through setting, color, technique, composition and light. Artist: Édouard Manet Title: The Luncheon on the Grass Date: 1862 and 1863 Medium: Oil paint

Introduction to Interview and Interrogation Essay

This paper that I am about to write is a case study on a juvenile confession. When I read this story it really bothered me that young people confess when they get in front of high authority people even if they didn’t do anything. Are these so called lawyers, attorneys and prosecutors, scaring these young people so much that they tell them things to make them confess? Well after reading this story, I have realized that this has happened more than once, and is becoming to be a pattern with some of these big shot people that are supposed to take the law seriously and help those in need, not make the ones in need of help scared half to death to ask us for it. On November 7, 1994, in the neighborhood of Englewood, on the south side of Chicago, a worker was outside cleaning up behind a liquor store and when he went to the dumpster to put the garbage in, he found the body of an African American woman who was badly beaten. When the woman was identified, the found out that she was a prostitute and her name was Nina Glover. At the scene of the crime, the policed interviewed a male who was a resident of the neighborhood, his name was Johnny Douglas. He denied that he knew the victim so the police let him go. Now four months after finding this woman in the dumpster, the police had no leads but someone called them and gave them a tip, so they acted on it. They arrested four African American teenagers, (Vincent Thames, Terrill Swift, Harold Richardson and Michael Saunders) for questioning and according to Detective James Cassidy, after interviewing the four, he said that all of them voluntarily confessed to the murder, saying that they all four took turns raping Nina Glover before they actually murdered her. Now DNA testing excluded these four teenagers as the source of semen that was recovered from Glover’s body, and all four boys claimed that the confessions that they had given had been coerced. See more: how to start an essay Even with that said the boys were sentenced based on the signed statements with such detail that they had given about their involvement. In return the jury convicted them each a prison term that ranged up to 30 to 40 years each. The media and the world had given these four teenagers, a group name that would seem to last and latch on to them forever, the Englewood Four. In the year of 2010, two of the boys had requested advanced â€Å"STR† which DNA is testing that comes along with a database search of the genetic profiles f criminals. The test were opposed by the Cook County prosecutors because contending whatever was done, the trial court judgments were said to be final. Finally, a judge heard about what was being asked, and he ordered it to be done and when he did, the results came back in May and the results were stunning. The DNA matched a person that the cops had interviewed right at the crime scene when it happened, none other than Johnny Douglas. So, with that said and done, the four teenagers had to be ruled out and exonerated. As the four young men now, families waited for them to come home, they were ready to give them a big welcome or so it seemed until the State’s Attorney Anita Alvarez announced that she would vigorously fight their release that they had just been granted. Now Johnny Douglas was a man with a long history of preying on prostitutes. He also had a rap sheet that was really impressive: he had 38 convictions, including murder and sexual assault. In the year 2008, someone shot him to death. There were a lot of questions after the exoneration of the four boys and some of those questions were seriously to be thought about? For instance: How did these four confess to crimes that they did not commit? Why did the DNA testing take so long? Why has the state’s attorney of Cook County Anita Alveraz, persistently fought justice for the four? Last but not least, how could the teenagers have provided so many details about the crime if they didn’t commit it? Meanwhile, while all these questions surfaced, Alveraz had her own theory as to what happened at the scene of the crime. She tells us that she thinks that â€Å"Douglas had sex, unprotected with Glover, left her, without harm and later on she was raped and murdered by the Englewood four. Alveraz also said that â€Å"Douglas didn’t kill every other prostitute that he had ever been with, and that DNA evidence in and of itself isn’t always the â€Å"silver bullet† that it’s sometimes perceived to be! † Where does this detective Cassidy fit into this? Well as I kept on reading this story, I realized that he was t he detective that actually was the one questioning the four boys and what he said, was the reason they were convicted because he said they confessed to him. Well, turns out that old detective Cassidy also had a rap sheet of his own. In 1994, the year before this case, the detective had taken a confession from and 11 year old African American boy who was supposed to murder an elderly white woman on the southwest side of Chicago. A federal judge listened to the confession and concluded that his statement had been coerced and the conviction was tossed out the door and the judge ordered the child’s record to be immediately expunged. Again in 1998, detective Cassidy was back, now this time he had another high profile confession with 2 African American boys ages 7 and 8. They admitted killing and 11 year old Ryan Harris and dumping her body out in a backyard. All of this is what Cassidy claims that they said. These two confessions created a national furor over pre-adolescent crime until the authorities found semen in the little girl’s panties. They automatically dropped the charges and they did later on secure a confession from an adult male about this case. Now after all of this Cassidy is no longer able to be active on the force. They had him reassigned to the Medical Examiner’s Office, and now his job is to obtain confessions from the recently departed. Now in my opinion, I would have told him to pack his stuff and go as far away from Cook County as possible and he is to never be able to practice law enforcement again. This story also hits home for me as well, my husband was involved in the wrong group of people, and he also lives in Cook County. He was involved in gang life and all of that, something happened (I’m not going to go into all the details) but to make a long story short, he also had to plead guilty to something that he did not do and he did the time for it. The point here is, these boys were false accused and they were scared into a confession that they didn’t do but landed them into prison. So I have found out that 76 wrongful convictions in Cook County since the advent of DNA testing, 25 were based ion suspects admitting to crimes they didn’t commit, according to the Center on Wrongful Convictions at Northwestern University. So now the Englewood Four, as they’ve been dubbed, await a decision by the prosecutors whether they will be re-tried or not. These Four men were cleared by DNA evidence that linked the state and the system to a career criminal in this particular crime.

Family Is A Role Model - 917 Words

Family is a word that many hold dear to their hearts. Family is defined as â€Å"a group consisting of parents and children living together in a household.† So in society’s eyes, the typical â€Å"family† would include a mom, dad, and siblings. However, that is not the case. Family can be a protector, a therapist, and a role model. Family is someone who protects you. Generally, when someone thinks of a protector they think of a spouse or older sibling. Your spouse will be the one to protect you from a burglar or even some creepy stalker. It’s just like in the movies where the couple hears an alarming noise at night so the wife hides in the bed while the husband picks up a baseball bat and goes to check it out. The same goes for a sibling. In school normally the big brother protects his little sister from bullies, and vice versus. It is an everyday occurrence, someone is always being protective and that individual is commonly considered family. 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