You Make the Call-Situation 1

question 41

Essay

You Make the Call-Situation 1
A small firm specializing in the sale and installation of swimming pools was profitable but devoted very little attention to management of its working capital. It had, for example, never prepared or used a cash budget. To be sure that money was available for payments as needed, the firm kept a minimum of $25,000 in a checking account. At times, this account grew larger; it totaled $43,000 at one time. The owner felt that this approach to cash management worked well for a small company because it eliminated all of the paperwork associated with cash budgeting. Moreover, it had enabled the firm to pay its bills in a timely manner.

Identify factors that distinguish monopolies from perfectly competitive markets.

Describe how monopolies determine their profit-maximizing level of output and price.

Explain the role of public utilities and natural monopolies in the economy.

Analyze the impact of monopolistic practices on efficiency and market outcomes.

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Definitions:

Steal

The act of taking something without permission or legal right and without intending to return it.

Consumer

An individual or group who uses goods and services produced within an economy.

Specific Product

A particular good or service that is distinct because of its brand, model, or other identifying characteristic.

Lower Price

A decrease in the cost at which goods or services are sold, often resulting from factors like increased supply or decreased demand.