Since its formation in 1901, U.S. Steel\'s share of many finished steel product
ID: 1191351 • Letter: S
Question
Since its formation in 1901, U.S. Steel's share of many finished steel product markets declined steadily. What mode! of pricing behavior can be used to account for this phenomenon? Explain the model with diagrams and its relevance to the market for steel products. Discuss the main sources of plant-level scale economics in the steel industry. Are there any multi-plant scale economics? The analysis of firms' dynamic behavior is substantially more complex than static models may suggest. In general terms, firms may face tradeoffs between strategics that favor the realization of current/short-term profits and sacrifice future ones, and strategies that aim to do the opposite (preserve high future profits by sacrificing current profits). What factors should a firm's decision-makers take into account while resolving these tradeoffs? Define and compare the information inputs for the following three measures of industry concentration: number of firms, CR-4, Herfindahl Index. Mainstream economics emphasizes static efficiency in the use of resources as the main benefit from (perfect) competition. Schumpeter on the other hand finds static efficiency not to be the most valuable feature of a capitalist economy, pointing out that large corporations are responsible for significant improvements in living conditions. Does that mean that Schumpeter finds no value in the process of competition? Discuss briefly. During the early 1980s oil prices fell precipitously. Can you develop a careful argument explaining how this pattern of price changes can be reconciled with the economic theory on the price of a depletable resource? Was the collapse of OPEC's internal discipline a factor"? (consider using diagrams to illustrate your argument) What was the US government's objective when, in the aftermath of the first oil shock, it instituted a ceiling for the price of "old oil", but not for that of "new oil"? What was the reason for complementing the price controls with the entitlement program? Discuss two reasons why the crude oil price increases of the 1970s can he attributed to the shift in the control over OPEC countries' output decisions from foreign companies to domestic decision-makers. US production of crude oil peaked in 1970 and declined steadily thereafter. Analysts argue that an important reason for the early timing of this output peak is that throughout much of the previous decades, various federal government policies gave domestic oil producers strong economic incentives to "drain America first." Can you identify- the four major policy instruments and explain carefully why they encouraged the rapid draining of US oil fields?Explanation / Answer
It is a fact that since the share of Steel has decreased in the finished steel product markets.
But it does not make necessary that a price revision or change in production patterns would revive the demand for the product in the market. Availability of substitutes, the demand for the finished products from the end consumers, the necessary government support for the industry and the cost of extraction are some of the other factors which play a crucial and vital role in determining the future of the industry.
For any product market, pricing model cannot alone be studied when the industrial demand and supply forces are free to decide the price.