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Pick one of the two questions below to answer all parts of and upload a picture of your answer, including a hand-drawn graph. Option 1: Boss Rooter, a plumbing company, spends money to advertise in the local mailer. Their tagline is: "Call the best flush the rest". They are one of 20+ plumbing companies in Fort Collins. Use this information to answer the following questions: 1.1. What type of market is Boss Rooter operating in and why? (i.e. monopoly, oligopoly, monopolistic competition, or perfect competition) (1 point: 0.5 for correct market ID and 0.5 for justification). 1.2. Assuming Boss Rooter operates in the market stated above, graph their demand, marginal revenue, marginal cost, and average total curves assuming they are making positive profits. (2 points) 1.3. Add the profit-maximizing output, price, and profits to this graph. (1 point) 1.4. Can Boss Rooter continue to make positive profits in the long run? Why or why not? What strategies might they employ in an attempt to keep positive long profits? (1 point) OR area (CPR, 11/18/22) 2.1. What is the market failure here and why is it a market failure? (1 point) 2.2. Graph the market for oil including both the private and social costs or benefits. (2 points) 2.3. What is the market equilibrium and how does it differ from the socially optimal equilibrium? Add these points to your graph. (1 point) 2.4. What is a possible solution to this market failure? Add this to your graph and explain how it works. (1 point) Pick one of the two questions below to answer all parts of and upload a picture of your answer, including a hand-drawn graph. Option 1: Boss Rooter, a plumbing company, spends money to advertise in the local mailer. Their tagline is: "Call the best flush the rest". They are one of 20+ plumbing companies in Fort Collins. Use this information to answer the following questions: 1.1. What type of market is Boss Rooter operating in and why? (i.e. monopoly, oligopoly, monopolistic competition, or perfect competition) (1 point: 0.5 for correct market ID and 0.5 for justification). 1.2. Assuming Boss Rooter operates in the market stated above, graph their demand, marginal revenue, marginal cost, and average total curves assuming they are making positive profits. (2 points) 1.3. Add the profit-maximizing output, price, and profits to this graph. (1 point) 1.4. Can Boss Rooter continue to make positive profits in the long run? Why or why not? What strategies might they employ in an attempt to keep positive long profits? (1 point) OR area (CPR, 11/18/22) 2.1. What is the market failure here and why is it a market failure? (1 point) 2.2. Graph the market for oil including both the private and social costs or benefits. (2 points) 2.3. What is the market equilibrium and how does it differ from the socially optimal equilibrium? Add these points to your graph. (1 point) 2.4. What is a possible solution to this market failure? Add this to your graph and explain how it works. (1 point)
