Write a paper examining perfect competition in the value-menu fast-food restaurant business. Address the following questions in your paper:
a. What are the characteristics of perfect competition? Why does this type of fast-food restaurant tend to display characteristics of perfect competition? b. Imagine you are running a firm with the characteristics of a perfectly competitive firm. Describe how your firm would maximize its short-run profits. c. Why might firms in perfect competition choose to be open on Monday, typically the slowest day of the week, when their revenues do not seem to be sufficient to warrant doing so? d. What are the long-run benefits of running a firm in perfect competition? e. Under what conditions would your value-menu fast-food restaurant decide to be open on Mondays, and when would it decide not to be open on Mondays? When is losing money on Mondays still a good business decision? f. Explain how your experience as a manager would change if the value-menu fast-food restaurant you were in charge of operated under a different market structure―monopolistic competition, oligopoly, and monopoly. For example, in each case, how would you decide what price to charge? What would your profits look like? Would consumers be better off in terms of welfare, when you compare a firm in monopolistic competition, oligopoly, and monopoly to one in perfect competition? g. Two sources in addition to your textbook are required for this paper.
3. Read Chapters 11 and 12 in Essential Foundations of Economics (Discussion). Review the media 3.4b Resource: Different Market Structures. View the following MyEconLab animations and videos from the MEL Multimedia Library: a. Animation: Figure 11.7: Zero Economic Profit in the Short Run b. Animation: Figure 11.8: Positive Economic Profit in the Short Run c. Animation: Figure 11.9: Economic Loss in the Short Run d. Animation: Figure 11.11: The Effects of Entry e. Video: Monopolies and Anti-Competitive Markets: Crash Course Economics #25 f. Video: Why Prescription Drugs Cost So Much g. Article: The problem with prescription drug prices Navigate to the threaded discussion and respond to the following: Compare the efficiency of monopolistic and perfectly competitive markets.
1. Discuss the economic factors that lead to the development of monopolies. Examples of monopolies include electric utilities, railroads, airlines, cable television, and sports leagues. Try to focus your answer on a specific industry. 2. Governments grant temporary monopolies through patents and copyrights to pharmaceutical companies, authors, and artists. Consider the trade-offs that society must make when granting those temporary monopoly rights. 3. Given what you know about perfectly competitive markets, compare the efficiency of monopoly and perfect competition. Which is more efficient? Explain your reasoning and try to illustrate with a hypothetical example.