1 / 3

The Economics of Market Competition and Licensing: A Study of Hot Pretzel Stands

This analysis explores three economic problems: the pricing strategy of a chemist producing doses of a magic potion, the effect of strong prices on industry expansion, and the dynamics of the hot pretzel market in New York City. It examines how a limited number of licenses impacts competitive equilibrium, the effects on individual vendors’ sales and profits, and how NYC could optimize its revenue through licensing fees. By addressing these scenarios, we gain insights into market behavior and regulatory impacts on small businesses.

caia
Télécharger la présentation

The Economics of Market Competition and Licensing: A Study of Hot Pretzel Stands

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Problem 14.2 The Magic Potion: A chemist is already producing 200 doses. Should she produce and sell another dose for $301?

  2. Problem 14.6 • Strong prices traditionally cause expansion in an industry, eventually bringing an end to high prices. EXPLAIN.

  3. Problem 14.9 Pretzel VendersSuppose there are 1,000 hot pretzel stands in NY, each with U-shaped ATCs. Demand is downward sloping and the market is initially in long-run competitive equilibrium. • Draw current equilibrium for representative firm and for the industry. • NYC now licenses only 800 stands. Show impacts on the market and on the individual stand that is still operating. • Now NYC charges license fee for the 800 licenses. • How does this affect each stand’s sales & profit? • How high should the license fee be to max. NYC’s fee revenue?

More Related