Hubert's Copy Services is in perfect competition. Hubert currently charges 10 cents per page, which is the going market price. He thinks that he can increase his profit by raising the price. Is it possible? Why or why not?
What will be an ideal response?
If Hubert raises his price, his profit will not increase. As a perfectly competitive firm, Hubert's is a price taker. It produces a tiny proportion of the copy services in the area, and buyers are well informed about the prices charged by other firms. So, if the market price is 10 cents per page and Hubert asks, say, 12 cents per page, his customers will go to the next copy service and Hubert will lose all his sales.
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The above figure shows Bob's utility function. He currently has $100 of wealth, but there is a 50% chance that it could all be stolen. Bob's expected utility is
A) a. B) b. C) c. D) d.
A market structure in which there is one large firm that has a major share of the market and many smaller firms supplying the remainder of the market is called:
A) the Stackelberg Model. B) the kinked demand curve model. C) the dominant firm model. D) the Cournot model. E) the Bertrand model.