What is the market structure you should use to understand the decisions of consumers and producers in this market ? Discuss whether the market is better understood as being perfect competition versus monopoly/oligolopy.

Evidence-Based Application Project  (Consumer and Producer Decision Making)

Economics

What you should turn in:

 

b. Market Structure:

– What is the market structure you should use to understand the decisions of consumers and producers in this market ? Discuss whether the market is better understood as being perfect competition versus monopoly/oligolopy.

c. The Firm’s Problem

– What inputs are required for production? Which inputs should be viewed as fixed factors and which as variable over reasonable timeframes (e.g. a one year period)?

– Given the required inputs, what fixed and variable costs do the firms face to produce output? Are there large fixed costs relative to variable costs?

– Given the market structure, should the firm be more concerned with setting the right price (the monopoly’s problem) or reducing costs (the main concern in perfect competition?)

d. The Consumer’s Problem

– What gives consumers utility in this market?
– Do consumers like using the product just for its use, or do they get utility from (not mutually exclusive)

I. Showing it off to friends
II. Reselling it after use
III. Psychological benefits from an “early adopter”
IV. Using it in complement with a different good
V. Some other reasons?

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