A. Is this behavior what you would expect if taxi drivers are rational and self-interested? Why or why not?
B. Prospect theory suggests that people gain less satisfaction from winning a certain sum of money than the satisfaction they would lose if they lost the same amount of money. How do you think prospect theory may explain the behavior of taxi drivers?
Response 5-7 sentence.
introduced to the four basic market structures in product markets.: perfect competition, monopoly, monopolistic competition, and oligopoly. In product markets, firms’ goal is to maximize profit given their demand curves and costs of production. In the case of monopoly, firms also consider other firms’ actions when determining profit-maximizing decisions. In both monopolistic competition and oligopoly, firms may engage in both price and non-price competition. Product differentiation is key to attracting consumers and creating brand loyalty. Product differentiation is evident in any store or media ads. Just consider the amount of money firms spend to advertise during the Super Bowl and the Academy Awards.
These fours types of markets can also exist in factor, or input, markets. Like product markets, economists use the competitive model to analyze policies that affect input markets, especially the labor market.
I confess that labor market economics never interested me that much until I began studying sports economics. Unlike capital and natural resources, labor has the ability to bargain over its use. If you look throughout history, conflict between employers and employees have existed. In a basic sense, this conflict is the essence of Karl Marx’s theory of communism. As either employers or employees, it is always important to understand how labor markets work and how policies affect them.
To start, in the labor market, individuals are the “suppliers” and firms are the “consumers.” Therefore, the labor supply curve reflects the willingness and ability of individuals to work given various wage rates, OTC. The labor demand curve reflects the willingness and ability of firms to hire individuals are various wage rates, OTC. As with product markets, most labor markets are not competitive. As many of us know, to get a job, we must differentiate ourselves from others applying for the same job. Chapter 19 introduces you to the monopsony model in which only one buyer of labor exists with many sellers. Monopsonies are the typical labor market structure for professional sports. The chapter also briefly introduces you to the impact of labor unions on the labor markets. In recent years, labor unions have become a major issue in many states