Economy and Critical Thinking Essay

1. The purpose of antitrust insurance is to promote __competition among firms_____, which leads to lower __price for customers______. Explain wherefore this is so? The purpose of antitrust policy is to promote competition, which leads to lower prices. If a smart set had the power of price control that comes with world a monopoly, they would profit by pickax the measuring stick/price that equals the highest revenue for their comp either. This would be likely a lower quantity and higher price than would prevail if in that respect was competition. Combining operations could lead to greater efficiency. Cost savings could come by combining HR or report depts. The main problem with cost savings is that a monopoly does not have the pressure to operate efficiently.2. Assume a strong baseball pitcher is worth $5 million per year to his group, comp bed to only $1 million for an unhealthy one. According to a baseball executive, If my assumptions are correct, our team is unforced to pay a maximum of $3 million for a pitcher in the free-agent market. What are the executives assumptions? be these assumptions realistic? The executive is assuming that on that point is asymmetric discipline off at that place about certain pitchers, meaning that the team that is selling the players has more than than information on his health than the uninformed vendee, the executive. So a groundsable assumption is that the executive allow for split the difference in the confused market and pay the average, which is $3 million. The executive does have realistic assumptions, simply for the concomitant that he has asymmetric information, and is not amply notified of the players injury status.3. Imperfect information fucking go both ways. What are mostwhat examples (your own, not from the text) of market situations in which the marketer has more information than the buyer and some examples in which the buyer has more information than the vendor?One example where the marketer knows more than the buyer would be when you are purchasing a house, the buyer does not know if there are any problems with the foundation or roofing or if all the appliances work well or will continue to work well. The vendor does know, because they have lived there long rich to know what is in good incarnation and what is in bad shape on thehouse. An example of the buyer knowing more than the seller is in the antique market, because the buyer may know more news report about what they are buying than the seller. The seller may not have frame as much time into researching the products.4. life-sustaining Thinking All states, of which I am aware, require automobile owners to insure their vehicle. Yet, studies turn out that having insurance actually increases the likelihood of an hazard and increases the likelihood of a car / cycle per second accident. Discuss why this is so. Who is protected and who is harmed by required automobile insurance? The reason that having in surance increases the likelihood of an accident is collectable(p) to the righteous hazard associated with car insurance. This is a situation in which one stance of an economic relationship takes undesirable or costly actions that the other side cannot observe. For instance, bloody shames car insurance social club doesnt know that she occasionally texts bit driving because they cant physically see her driving.Mary does this because she assumes that if anything happens, she is insured and she will be able to financially wield the costs of any accident. It takes the responsibility finish off of Mary (slightly) and puts it on the insurance conjunction which makes Mary act more recklessly. The psyche driving the vehicle is somewhat more protected because of insurance. They are able to financially cover losses to other drivers due to their negligence and risk taking. However, the other drivers on the road and the pedestrians that may be out walking are harmed by this added moral hazard because, lets introduce it, all the insurance in the world wont bring soulfulness back if Mary is texting and driving and kills them.