All Terrain Thinking

A Compendium of things I think are Important

Economics: It's not just whats' in your wallet

Answers for the Day
Imperfect Competition 

1. How can we explain the differences between the advertisements in the auto and milk industry?

2. Why do oligopolies advertise more than competitive firms if they are not as dependent on market forces?

3. How was OPEC able to drive up the price of oil so successfully in the 1970s? What happened in the early 1980s that 'broke' the price?

4. Would you expect to see cartels in the market for copper or fast food burgers? What is the structural 'flaw' in cartels which makes it so difficult for them to artificially raise price?

5.  How about helping out a colleague who is having some second thoughts about a grading scheme that he has proposed to the class.  The system is a simple variation of the grading curve.  The top score and all students who get within 10 points of that score get an A.  All students who get between 10 and 15 points below get a B; 15 to 20 points below get a C...  The problem is that the faculty member heard the students organizing a meeting to agree on the following strategy.   All students will agree to set a low enough target for the number of questions right so that all students can answer correctly that number.  Do you have any advise for the faculty?  Should he be concerned about this cartel?

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