13, 14, 15

Question 1

A characteristic of a perfectly competitive market is that the product offerings of various producers are perfect substitutes. Provide an example of an industry where you see little difference between the offerings of the various firms in that industry.

Classmate 1

When thinking about a perfectly competitive market the first thing that comes to mind is water bottles. All water is relatively the same thing so companies really need to get creative to influence customers to purchase their water besides other companies water.

Classmate 2

A competitive marker that I first think of is clothing stores and boutiques. It is a competitive business these days and a lot of time their products are very similar. In addition, sometimes you can find the same product on multiple sites. If one online boutique is out of a particular dress, you might find it on another site. I find these sites fairly similar in their products, and this allows for perfect substitutes. 

Question 2

The logic of sequential games involves the first mover anticipating how the second mover will react to various actions. Provide an example where you've accounted for the subsequent reaction of another person or entity when you were making a choice. Did your anticipation of the reaction affect the choice you ultimately made?

Classmate 1

In life you sometimes have to deal with some negative energy, and it can be an example of making a choice to put your energy into them. I have been in situations where I accounted for the subsequent reaction of the person to react in a way I did not deserve, where I simply was kind and walked away. I think this is a more relationship side of an example of this but it is something I experienced where I anticipated their reaction and made a choice for myself.

Classmate 2

A good example of this in my life would be when I play Texas hold 'em with my friends. When I am deciding whether to bet or not, depending on my hand and what I think other people may have, I am trying to bet in a way that gets people to do what I want. If I have a really good hand, I might bait people into betting and slowly raise what I bet as the hand plays out to try to keep people betting and the pot growing. If I have a really bad hand but I know I have a money advantage, I might bet exactly how much someone has on the table to try to scare them off. So in poker, every decision I make is based off of what I anticipate my friends reactions will be.

Question 3

A monopoly finds itself in a position where (unlike in perfect competition), it can raise its price and not lose all its customers (though it might lose some of its customers). Provide an example of a firm with which you interact where you would continue buying from them even if they raised their price. Why would you tolerate this price increase?

Classmate 1

A good example of this would be the hair products I use. Because I get my hair done, I have to use more expensive products to preserve my hair and keep it healthy after it undergoes different processes. After COVID, the prices did increase, but I enjoy getting my hair done and how it looks, so I still buy the neccessary products for my hair. If I were to stop getting my hair done, I would still buy the same brand because it is what I am use to getting. 

Classmate 2

I think a good example of a monopoly is online TV services like Netflix. Netflix started out at a much lower price, but as they gained more customers the prices have begun to increase. Netflix is, in my opinion, more convenient than live television so I would be willing to pay a good amount more than I am now to keep using it. They have also come out with several Netflix original series that can only be watched on Netflix, so I would definitely be willing to pay more if necessary.