College Essays-What is the long-run welfare effect of a profit tax (the government collects a specified percentage of a firm’s profit) assessed on each competitive firm in a market?

Can a firm be a natural monopoly if it has a U-shaped average cost curve? Why or why not?

Many universities provide students from low-income families with scholarships, subsidised loans, and other programs so that they pay lower tuitions than students from high-income families. Explain why universities behave that way.

Spencer’s Superior Stoves advertises a one-day sale on electronic stoves. The ad specifies that no phone orders are accepted and that the purchaser must transport the stove. Why does the firm include these restrictions?

Your university is considering renting space in the student union to one or two commercial textbook stores. The rent the university would charge depends on the profit (before rent) of the store or stores and hence on whether there is a monopoly or a duopoly. Which number of stores is better for the university in terms of rent? Which option is better for the students? Explain why.

Will the price be lower if duopoly firms set price or if they set quantity? Under what conditions can you give a definitive answer to this question?

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