This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Game theory is a tool for studying competitive behavior between firms in monopolistic competition ... (Read 81 times)

fbq8i

  • Hero Member
  • *****
  • Posts: 527
on: Jun 29, 2018
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
Reply #1 on: Jun 29, 2018
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
Gracias!

helenmarkerine

  • Member
  • Posts: 324
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

Most women experience menopause in their 50s. However, in 1994, an Italian woman gave birth to a baby boy when she was 61 years old.

Did you know?

Ether was used widely for surgeries but became less popular because of its flammability and its tendency to cause vomiting. In England, it was quickly replaced by chloroform, but this agent caused many deaths and lost popularity.

Did you know?

A seasonal flu vaccine is the best way to reduce the chances you will get seasonal influenza and spread it to others.

Did you know?

Liver spots have nothing whatsoever to do with the liver. They are a type of freckles commonly seen in older adults who have been out in the sun without sufficient sunscreen.

Did you know?

You should not take more than 1,000 mg of vitamin E per day. Doses above this amount increase the risk of bleeding problems that can lead to a stroke.

The frequency of competition according to the number of species involved. The frequency of competition according to the number of species involved.
A cheetah strangling an impala, Timbavati Game Reserve, South Africa A cheetah strangling an impala, Timbavati Game Reserve, South Africa
Welcome sign for Kenton, Tennessee, an example of competition for "White Squirrel Capital" Welcome sign for Kenton, Tennessee, an example of competition for "White Squirrel Capital"
Jane Goodall pioneered the modern approach to studying primates in the wild, involving close-up obse Jane Goodall pioneered the modern approach to studying primates in the wild, involving close-up obse
The Triangular Theory of Love The Triangular Theory of Love
Competitive firms and maximization Competitive firms and maximization
Video: DNA close up Animation

For a complete list of videos, visit our video library