New answers tagged

0 votes

Pareto Improvement with Monopolies

Most of the discussion on Pareto optimum misses the very basis of the model. It is simply a model describing how a set of producers and consumers moves to an equilibrium in a given market situation. ...
user avatar
0 votes

Do monopolistic firms indirectly increase prices of products sold by perfectly competitive firms?

In perfect competition, there are no profits at all. Given the profit function: $\Pi = (P-MC)Q $, if $P=MC$, then $\Pi =0$. If you believe in the Arrow's replacement effect, the perfectly competitive ...
user avatar
  • 100
0 votes
Accepted

Why does negative derivative of AC with respect to q imply Economies of scale (Monopoly)

Could anyone argument on that? Your professor was correct. For economies of scale to be present the $AC'_q<0$. This is because $AC'_q<0$ says that average costs fall when you produce more ...
user avatar
  • 43.6k
3 votes
Accepted

Doesn't it make sense in terms of economic security for tech companies to support unions?

To this end, wouldn't it make sense for corporations like Amazon and Starbucks, with massive profits and incredibly wealth CEO's, to at least appear to "share the wealth" and go along with, ...
user avatar
  • 43.6k
-1 votes

Why companies choose to make zero economic profits in the long-term when it can maximize it instead? Why does Apple have large profit margins?

I am going to challenge your assumption that the companies aren't making a profit. Companies pay taxes based off of NIBT (net income before taxes). If your company has a net income of $0 dollars after ...
user avatar
10 votes

Why companies choose to make zero economic profits in the long-term when it can maximize it instead? Why does Apple have large profit margins?

Why companies choose to make zero economic profits in the long-term when it can maximize it instead? Companies do not choose to make zero economic profits. In economics we start with assumption that ...
user avatar
  • 43.6k
10 votes
Accepted

Why companies choose to make zero economic profits in the long-term when it can maximize it instead? Why does Apple have large profit margins?

I read that companies in the monopolistic competition make zero economic profit in the long term. Why would a company do that when it can maximize the profit instead? Please give sources when you ...
user avatar
  • 26.7k

Top 50 recent answers are included