Access over 20 million homework & study documents

search

ECO 204 WEEK 4 DQs

Type

Study Guide

Rating

Showing Page:
1/2
ECO 204 WEEK 4 DQ 1
In a market in which there is vertical differentiation, we always see price differences among the
products. In markets with horizontal differentiation, sometimes the products differ but prices are
very much the same. Why does vertical differentiation naturally bring with it price differences?
The answer, of course, is in the price. The better products cost more, and only some people find
it worthwhile to pay higher price to get a better product. So differences among people also give
rise to vertical differentiation. Some people value quality in a specific product more than others
do and are willing to pay for that quality. (pgs. 308 & 309) My understanding of vertical
differentiation is the price (in this case top price) of a product that some people are willing to pay
maybe not for the product itself, but that product's superior quality. However, does this mean that
a product with a lesser quality is a bad product? no. Does it mean that the product with a lesser
quality will flounder in its market against its top competitor? not at all. It just means that people
are more willing to pay top dollar for a product than others, and some people are content with
paying for a similar (but not as expensive) product. When it comes down to it, the consumer will
buy the product that best suits his or her needs.
Reference:
Fair, K.E., Case, R.F., & Oster, S.M. (2009) Principles of Microeconomics. (9th Ed.) Pearson
Prentice-Hall: Upper Saddle River, NJ.
CHOICE 2
Vertical differentiation occurs in a market where the several goods that are present can be
ordered according to their objective quality from the highest to the lowest. It's possible to say in
this case that one good is "better" than another.
The deciding factor is, ultimately, price and perception. People will spend more on perceived
quality if they are able because people equate higher price with superior quality. This is not
always true. I used to work for a nationally known grocery chain. A very famous, national brand
potato chip maker also made our house brand potato chips. The only difference was packaging,
price, and perceived quality. I could tell people all day and it made little difference, they would
go for the national brand every time.
Is one beer better than another because they have funnier commercials? Are Lee jeans really of
better quality than Wrangler? If price isn’t an issue then it comes down to personal preference.
ECO 204 WEEK 4 DQ 2

Sign up to view the full document!

lock_open Sign Up
Should welfare benefits be higher in California and New York than in Mississippi? Defend
your answer.
Benefits levels are set by the states, and they vary widely. In January 2003, the maximum
monthly payment to a one-parent family of three was $170 per month in Mississippi, $639 per
month in Vermont, and $923 per month in Alaska. The average monthly payment in the United
States was $423. (pg. 374)
In my opinion to answer the question, I feel it would depend on the circumstances as to whether
California and New York's welfare benefits should be higher than Mississippi's welfare benefits.
However, at the same time in terms of population, California and New York, I believe these
states would benefit more because these states would have more welfare recipients than
Mississippi. However, in terms of high-risk disaster areas, Mississippi would benefit more
because the southeast United States has the tendency for disaster such as hurricanes and
tornadoes.The bigger picture here is that needy families are in every state, so really all the
aforementioned reasons I gave are irrelavant. Which ever state you live in, assistance is there for
those who need it.
Reference:
Case, K.E., Fair, R.F., & Oster, S.M. (2009) Principles of Microeconomics. (9th Ed.) Pearson
Prentice-Hall: Upper Saddle River, NJ.
CHOICE 2
Should welfare benefits be higher in California and New York than in Mississippi? Defend your
answer.
I feel as if the welfare benefits should be near equal only if they have a housing program that’s
available to everyone that qualify for it. I feel this way because the only reason I think the
benefits have such a major difference is because of the cost of living per area. In NY and CA the
cost of living is much higher than in MS which is why there is such a difference.

Sign up to view the full document!

lock_open Sign Up
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Anonymous
Just the thing I needed, saved me a lot of time.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4