Answer: Option (A) is correct.
Explanation:
In a competitive market, when the demand curve i.e. the marginal benefit curve is exactly equal to the supply curve i.e. marginal cost curve and at this point the sum of consumer and producer surplus is maximized then an equilibrium is set in an economy and economic efficiency is obtained.
Inefficiency occurs at a point where there is a disequilibrium in an economy which means that competitive equilibrium is not achieved by the economy.
Answer: 16 units more than social optimum.
DWL = dead weight loss = (1/2)*(Q* - Q°) 12 =96
Explanation:
Q=1200 - 4P and Q=-240 + 2P
In a free market quantity demand =quantity supplied
1200 -4P = -240 +2P
P =240
Sub P
Q* = 240
Socially optimal quantity is
Marginal social benefit (MSC)= marginal social cost(MSC), including external damage =MEC
MPC= marginal private cost =inverse of supply function
MPC = (1/2)*Q + 120
MEC=12
MSC =(MPC +MEC) = (1/2)Q +120 +12
MSC= MPB where MPB is marginal private benefit = inverse of demand functn
MPB = 300 -(1/4)Q
(1/2)Q + 132 =300 - (1/4)Q
Q° = 224
Difference btw Q* & Q° = 16 units more than social optimum.
DWL = dead weight loss = (1/2)*(Q* - Q°) 12 =96
1. ignorance of laws/statutes/regulations in each country and communication issues
2. vulnerability of being a new entry in global competition
3. off-site business, finding trustworthy trade partners whom you've never met
Answer: C. Ahrens will respond aggressively because of the high multimarket contact between Hilliard and Ahrens.
Explanation:
Ahrens will respond aggressively because of the high multimarket contact between Hilliard and Ahrens.
Ahrens Vitamins and Hilliard Pharmaceuticals have high Market commonality. They operate in the same geographical area and their target market is the same, meaning an increase in Profits for Hilliard Pharmaceuticals is a decrease in profits for Ahrens Vitamins, an attack from Hilliard will ave severe consequences for Ahrens Pharmaceuticals as they compete for the same target market.
Ahrens Vitamins will have to respond aggressively to attacks from Hilliard Pharmaceuticals in order to maintain their position in the market
