Hello there. I hope the language below meets your needs. But if
anything requires further elaboration, please let me know through a
Request for Clarification before rating this answer.
Thanks,
pafalafa-ga
-------------------------------
1. Which oligopoly model do you think best explains the U.S
Telecommunications industry and why?
It’s not clear that the modern telecommunications industry should be
regarded as an oligopoly at all. The chief characteristic of an
oligopoly has always been a market with a limited number of sellers.
The US automobile or steel industries of the 1950’s are prime examples
– market sectors that were totally dominated by three or four giant
companies.
At one time – shortly after the breakup of AT&T, the US
telecommunications industry may have been similarly regarded, when a
handful of “Baby Bells” dominated the market. But rapid changes in
the business and technologies of communication has made this notion
somewhat obsolete.
For one thing, the “telecommunications industry” is no longer clearly
defined, as so many different types of businesses and technologies
have become involved in “communications”, including: traditional phone
companies; cable companies; satellite services; wireless communication
services; internet service providers; networking companies; hardware
and software providers…the list goes on. The Alliance for
Telecommunications Industry Solution, a trade association in
Washington DC, boasts more than 400 members. It’s difficult to
conceive of this industry as a traditional oligopoly.
That said, the telecommunications sector does have some
characteristics of an oligopoly, particularly a “differentiated
oligopoly”, where product streams are similar, but not necessarily
interchangeable, from one company to the next (unlike say, the steel
industry, where the product largely is interchangeable).
Another key characteristic of an oligopoly is the interdependence
among companies. A change in price by one firm, or an advance in
technology, will affect all the players in the market place. This
dynamic appears to be at play in the telecommunications sector, and in
this sense, it can be thought of as a quasi-oligopoly.
2.A study found that demand for Wi-Fi hotspots was highly
price-sensitive, and that further (price) cuts might boost demand
Explain what the author is trying to say? Do you agree or disagree
with this statement? Why?
The author of the study meant that the number of people to make use of
Wi-Fi hotspots is limited by the perception among users that the price
is relatively high, and that lowering the price of Wi-Fi service will
attract many more users.
Hotspots are places -- typically in coffee shops, airports and other
high-traffic areas -- where people can use their laptop computers to
access the internet through a wireless node. Users may have to sign
up with a service and pay a fee in order to have such access.
The study’s findings make sense. Many consumers have wireless-enabled
laptop computers for accessing home or office equipment, but may be
reluctant to use a fee-based service if they feel the price is too
high. But lower prices will attract more users in a simple case of a
lower price generating more demand.
3.She places a high value on her time so that we rarely get to even
chat
with her. What is wrong with this statement?
I’m not sure anything is wrong with this statement.
Taken literally, it could mean that a professional person – say, a
lawyer – charges so much for access to her time, that a client would
hesitate to “chat” with her, unless the need for here services was
great, and worth the cost.
But even in a more every-day setting, the statement seems to makes
sense. A person who greatly values their time is very conscious of
the opportunity cost of a casual conversation. By talking to Person
X, she loses the opportunity to talk to Person Y. And if she has more
to gain by talking to Y, then she is likely to minimize the
opportunity for X to have a “chat”. Even if there is no specific
price tag put on her time, there is still an economic trade-off that
take place.
It’s difficult to see how this statement would be obviously “wrong” in
an economic sense, although I can see how, from a social or
psychological perspective, someone might take issue with it. |
Clarification of Answer by
pafalafa-ga
on
03 Aug 2003 20:14 PDT
Thanks for clarifying what you need. I hope I've provided it below,
but if we're not quite there yet, just let me know through another
round of comments. I'm happy to continue assisting you until you feel
you have just the answer you're looking for.
pafalafa-ga
-----------------
[I've added some more concrete economics to the Wi-Fi answer. Let me
know if still needs additional work]
2.A study found that demand for Wi-Fi hotspots was highly
price-sensitive, and that further (price) cuts might boost demand
Explain what the author is trying to say? Do you agree or disagree
with this statement? Why?
The study’s findings seem to make perfect sense.
Hotspots are places -- typically in coffee shops, airports and other
high-traffic areas -- where people can use their laptop computers to
access the internet through a wireless node. Users may have to sign
up with a service and pay a fee in order to have such access.
The author of the study meant that the number of people who make use
of
Wi-Fi hotspots is limited by the perception among users that the price
is relatively high, and that lowering the price of Wi-Fi service will
attract many more users.
Many consumers have wireless-enabled laptop computers for accessing
home or office equipment, but may be reluctant to use a fee-based
service if they feel the price is too
high. But lower prices will attract more users in a simple case of a
lower price generating more demand.
To put it more formally, a plot of the supply curve and the demand
curve for Wi-Fi service would show a current condition where the price
is above the equilibrium point, and there is, as a result, excess
supply of Wi-Fi service. Lowering the price towards the equilibrium
price will increase demand in the form of more users, and more
frequent use by existing users.
------------------
[For the high-value-of-time question, I've included language about
explicit and implicit costs. You also mentioned an interest in
"incremental cost for a decision analysis". I'm not really sure what
you mean by this. If the answer still needs some more work, just let
me know a bit more about how I can improve it, and I'll be happy to
rework it]
3.She places a high value on her time so that we rarely get to even
chat with her. What is wrong with this statement?
I’m not sure anything is wrong with this statement.
Taken literally, it could mean that a professional person -- say, a
lawyer -- charges so much for access to her time, that a client would
hesitate to "chat" with her, unless the need for her services was
great, and worth the cost. In a case like this, the transaction
between lawyer and client involves "explicit costs", where money
actually changes hands.
But even in a more every-day setting, the statement seems to makes
sense. A person who greatly values their time is very conscious of
the opportunity cost of a casual conversation. By talking to Person
X, she loses the opportunity to talk to Person Y. And if she has more
to gain by talking to Y, then she is likely to minimize the
opportunity for X to have a chat. Even if there is no specific
price tag put on her time, there is still an economic trade-off that
take place. In this case, the costs involved are known as "implicit
costs", and can be valued as the maximum amount of money that the
individual could have received for her time.
It’s difficult to see how this statement would be obviously wrong in
an economic sense. The woman is allocating an important resource --
her time -- and assessing the opportunity costs of engaging in an idle
chat. This conforms to mainstream economic thinking, although I can
see how, from a social or psychological perspective, someone might
take issue with it.
-----------------
|
