Why might a concentration ratio be a poor measure of actual industry competition?
What will be an ideal response?
Concentration ratios measure national competition within a line of products that are substitutes in production. Where there is much international competition, where competition is regional rather than national, where there is competition from products that are substitutes in consumption but not production, and for other reasons listed in the text, competition ratios may be poor measures of competition.
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When countries converge,
A) they all grow at the same rate. B) poorer ones grow faster. C) richer ones grow faster. D) richer ones do not grow.
Joseph has the utility function U(F,H) = 10F2H, where F is the quantity of food he consumes per year and H is the quantity of housing per week. Suppose the price of food is $10 and the price of housing is $5, while Joseph has an income of $150/week
a. Calculate Joseph's MRS as a function of the quantities F and H. b. Write out Joseph's constrained optimization problem with the information provide d. c. Using the substitution method, solve for Joseph's optimal consumption bundle of food and housing. d. Show that at the optimum, Joseph consumes the bundle along the budget constraint where MRS = MRT.