This topic contains a solution. Click here to go to the answer

Author Question: Game theory is a tool for studying competitive behavior between firms in monopolistic competition ... (Read 80 times)

fbq8i

  • Hero Member
  • *****
  • Posts: 527
Game theory is a tool for studying competitive behavior between firms in monopolistic competition because of the mutual interdependence among the firms.
 
  Indicate whether the statement is true or false

Question 2

Because the price of a diamond is much greater than the price of a gallon of water, the consumer surplus from diamonds is greater than the consumer surplus from water. Is the previous analysis CORRECT? Explain your answer.
 
  What will be an ideal response?



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

livaneabi

  • Sr. Member
  • ****
  • Posts: 328
Answer to Question 1

FALSE

Answer to Question 2

No, the analysis is incorrect. The paradox of value points out the error. Diamonds are scarce, so they have a high price and a high marginal utility. Water is abundant, so it has a low price and a low marginal utility. But the total utility from water (vastly) exceeds that from diamonds and so the consumer surplus from water (vastly) exceeds that from diamonds.




fbq8i

  • Member
  • Posts: 527
Reply 2 on: Jun 29, 2018
:D TYSM


meganmoser117

  • Member
  • Posts: 303
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

Did you know?

Signs of depression include feeling sad most of the time for 2 weeks or longer; loss of interest in things normally enjoyed; lack of energy; sleep and appetite disturbances; weight changes; feelings of hopelessness, helplessness, or worthlessness; an inability to make decisions; and thoughts of death and suicide.

Did you know?

Cyanide works by making the human body unable to use oxygen.

Did you know?

The first war in which wide-scale use of anesthetics occurred was the Civil War, and 80% of all wounds were in the extremities.

Did you know?

When blood is deoxygenated and flowing back to the heart through the veins, it is dark reddish-blue in color. Blood in the arteries that is oxygenated and flowing out to the body is bright red. Whereas arterial blood comes out in spurts, venous blood flows.

Did you know?

Cutaneous mucormycosis is a rare fungal infection that has been fatal in at least 29% of cases, and in as many as 83% of cases, depending on the patient's health prior to infection. It has occurred often after natural disasters such as tornados, and early treatment is essential.

For a complete list of videos, visit our video library