Author Question: A growing number of cigar manufacturers in the Caribbean and Central America have begun producing ... (Read 96 times)

captainjonesify

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A growing number of cigar manufacturers in the Caribbean and Central America have begun producing and exporting cigars to the U.S. market. How has this affected the equilibrium price and quantity of cigars?
 
  What will be an ideal response?

Question 2

Why are some of the markets that provide information likely to be dominated by monopolies?
 
  What will be an ideal response?



ultraflyy23

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Answer to Question 1

The supply curve for cigars shifted to the right resulting in a lower equilibrium price and higher equilibrium quantity.

Answer to Question 2

Objective information about, say, the quality of a good or service or the risk associated with a particular activity is costly to obtain. Once it is obtained, however, the marginal cost of disseminating it is low. With the low marginal cost, the firm can enjoy significant economies of scale, so these markets might be close to natural monopolies, that is, a market in which one firm can meet the demand at lower cost than could two or more firms.



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