What are the reasons for which a legal cartel may be destroyed.

Association of firms that are connected with each other to restrict of output and to rise market price is called CARTEL. In many countries cartels are prohibited by law. As monopolist produces less than competitive firms the cartel establishes quarters for its members. It is one of the reasons which causes instability of cartel. The other reason of destroy – new firms enter into the market.

39) What means the principle of equal utility? Think of an example with two goods illustrated this principle.

Let's admit, the price of one apricot is equal 5 rbl. How many apricots the buyer at this price will buy? Possibly, it will compare utility of money which it thus loses, with utility of the got goods. Buying one apricot, the buyer loses the utility equal of 5 rbl., and gets the utility also equal of 5 rbl. Thus, from this exchange it does not suffer a loss.

40) What determines the existence of natural monopolies?

The natural monopoly exist for price range for which that is economy of scale.

Natural monopolies are based primarily on achievement-referred supply networks, like e.g. Stromleitungen, railways, roads, airfields or telecommunications cables. Goods, those in their achievement contribution are dependent on an appropriate infrastructure (river, gas, water, telecommunications, postal services, traffic) must thus as relevant be classified. Mostly it is advisable to make in the context of the respective creation of value chain an isolation of sensitive capacity ranges in order to make a properly matching adjustment possible from market power to.

Вставить график экономии от масштаба стр.198 (Мухамедиев)

49) How a rational individual reacts to reduce the wage rate? The rational individual at reduction of the rate of a salary increases leisure time, flat that if pay less, it is necessary to work less. For it the substitution effect t2-t0 dominates over an income effect t1-t2. As a result observable change of time of leisure t1-t0 = (t2-t0) + (t1-t2) is positive.

50) What is -competitive market of production factors? The competitive market of factors of manufacture is market on which there is a great number of sellers and buyers the manufacture factor, and the separate seller or the buyer cannot affect cost of the factor of manufacture. For example, if separate firms get for building of houses a small part of the general market volume of saw-timbers, their decision on purchase does not affect in any way the price. Similarly decisions on volume of output of suppliers of saw-timbers, each of which supervises a small share of the market, not influences on market price of saw-timbers sold by them.

51) What makes irrational individual in response to a decrease in the wage rate? The irrational individual at reduction of the rate of a salary considers that it is necessary to work more to support a former standard of living. The income effect t1-t2 in that case dominates over a substitution effect t2-t0. Therefore observable change t1-t0 = (t2-t0) + (t1-t2) is negative

52) What is the supply curve shape in a competitive labor market? For p < min AVC the sentence is equal 0. As limiting costs of firm increase with growth Q the sentence curve is directed above=right.The curve of the sentence of competitive firm in the short-term period represents a part of an increasing branch of a curve of the limiting costs МС, located above a curve of average variable costs AVC

In the LONG-TERM PERIOD is a PART of the INCREASING BRANCH of the CURVE of ITS LIMITING COSTS LMC, located above a curve of average costs LAC
53) Explain why the isoquant has a negative slope? Isoquant has a negative slope because when the costs of one factor is decreasing it needs to be increase the costs of another factor for saving output,

54) What about the curve of marginal revenue when the firm is a monopolist in the market of the product? Marginal revenue of a monopolist For the firm under perfect competition is characterized equal marginal revenue and price. For a monopoly situation is different. The curve of average income and price coincides with the market demand curve and marginal revenue curve lies below it.
Why marginal revenue curve lies below the curve of market demand? Since the monopoly - the only manufacturer of products on the market and a representative of the entire industry, it is reducing the price of products to increase sales volume, is forced to reduce it to all units of goods sold, and not just follow (Figure 12.1). Fig. 12.1. Price and marginal revenue of firm-monopolist: D - demand; MR - marginal revenue For example, the monopolist can sell at a price of 800 rubles. only one unit of its products. To sell two units, it should reduce the price to 700 rubles. as the first and the second unit. To sell three units of production, the price must be equal to 600 rubles. for each of these four units - 500 rubles. etc. The firm's revenue, respectively, will be a monopolist in the sale: 1 unit. - 800 rubles. 2 units. - 1400 (700 • 2) H-1800 units (600 • 3) 4 units-2000 (500 • 4).
Accordingly, the limit (or the third as a result of higher sales per unit of production) income will be: 1 unit. - 800 rubles. 2 units. - 600 (1400 - 800), 3 units. - 400 (1800 - 1400), 4 units. - 200 (2000 - 1800). Fig. 1.12 demand curves and marginal revenue are shown as two distinct lines, and marginal revenue in all cases except for 1 unit of output., Less the price. And since the monopolist decides on amount of production, equalizing marginal revenue and marginal cost, price and quantity of output will be different than in a competitive environment.