Managerial Economics and Globalization - ECO 550

Week 1 Problem Set

Jason Hanson

1. In each of the following examples, discuss which market model appears to best explain the behavior described:

a. Dry weather unexpectedly cut the 2003 soybean harvest by 15 percent, making it the smallest harvest in seven years. China increased its demand for soybeans, acquiring a record 300 million U.S bushels between September 2003 and April 2004. The Bush administration expected that U.S farmers would respond to the high prices by planting more soybeans in the next cycles.

Perfect Competition Model, this model illustrates the perfect market. One producer does not change the market by his self, but as a whole there can be great changes.

b. In spring 2004, General Motors launched...