Economic Consulting Letter
You are the Chief Economist of Econocorp whose business is represented in the graph below.
Your job is to advise the CEO of Econocorp. Be sure to include the following items in your letter:
- Is Econocorp engaged in perfect competition or is it a monopoly? How do you know? What does that mean about Econocorp's business and competition? Chapter 11 & 12
- What is the profit maximizing quantity and price that Econocorp should charge its customers? What is the profit maximizing condition? Where do you find this information on the graph? Chapter 12
- Is Econocorp currently making a profit? How much is their profit or loss? How can you tell? Chapter 10 & 12
- If Econocorp is earning a profit in the short-run, will they be able
to maintain that profit in the long-run? How? Chapter 10 & 12
- When maximizing profit, is Econocorp producing a socially optimal (efficient) amount? What is the socially optimal amount of this product and socially optimal price? What is the socially optimal condition? Where can you find this on the graph? Chapter 6, 8, 12
- If the government wished to minimize the deadweight loss in this market, what can they do to bring the market closer to efficiency? Chapter 12
Remember the CEO is a busy person. You should be straight to the point, precise, and not hedge. You should use what you have learned in this class with your textbook and note packet as your primary resources. Random Googling, Wikipedia, and Investopedia are frowned upon. Your letter should be approximately 1/2 to 1 page long with 3-4 paragraphs.