Bus 571

Module 04: Assignment

Chapter 8
Problems 8-1
Two choices of AA batteries that are priced the same for the same quantity (4) is not an example
of a dual monopoly, but instead represents perfect competition. The example does not provide
information in regard to advertisement; however, we can assume that anyone who needs batteries
will pick either option depending on preference.

Problem 8-3
I would agree with Paul Terhost that “Monopoly power comes from market acceptance, not from
a patent”. Most patents are useless as they can easily be designed around making slight
alterations.

Chapter 9

Problem 9.3

The farmer that owns acreage known as the Tysons Corner should be allowed to make a profit by
selling his land to developers. Once the land is sold, the farmer is giving up any future profit or
earning he may have had if he held onto the land.
Chapter 16
The Consumer Price Index (CPI) does NOT include the following items:

D) Stock Market Prices: The CPI does not cover the value of securities and other investment
prices: stocks, bonds, life insurance and some types of real estate (Skousen, 2017).
E) Cost of business machinery: The CPI does not account for product improvements or product
replacements. The CPI has no standard for measuring quality improvements and therefore
reflects only the increase in price without any appreciation for additional advantages to
consumers by having new business machinery.
F) Personal income taxes: The CPI does include a factor for taxes related to consumer goods
such as sales taxes, property taxes, excise taxes and even toll charges and federal user fees but it
doesn’t include all taxes like income taxes and Social Security Taxes.