Assignment:
Part A
Imagine that it is the year 2199. Technology has progressed at an incredible pace. The latest discovery is the plutonium engine, which is capable of converting plutonium, a by-product of nuclear fission, into fuel to power the nuclear reactors in our new form of transportation, the rocket-car. However, because the firm that invented the engine, the Futures Unlimited Corporation, already has a government license to control and distribute the quantity of this certain isotope of plutonium on the market, it is now conceivably in charge of a monopoly on plutonium-fueled transportation.
Describe the economic outcome of this single-price monopoly in terms of profit. Provide one supporting fact to support your response.
Describe one way that the Futures Unlimited Corporation makes output and price decisions.
Part B
Would consumers benefit more from a tariff or a quota on imports? Provide one supporting fact to support your response.
Consider the following weekly production possibilities of gloves and hats in Panama and Russia:
|
|
Russia
|
Panama
|
|
Gloves
|
20
|
180
|
|
Hats
|
80
|
90
|
What is each country's opportunity cost of producing gloves and hats?
If the countries could, should they trade? Provide one supporting fact to support your position.