Week 11 Discussion — One Ferry or Two? Weighing Market Power — Traditional alternative (no AI)

Instructors: publish this instead of the adaptive version if you prefer, and unpublish or delete the adaptive one.

Hook

A town with one ferry pays more and travels less than a town with many boats, and yet the one ferry may be the cheapest way to carry everyone across. This week you measured what a monopoly costs riders, so you can now argue about what a town, or a country, should do about a seller with no rivals.

Your discussion question — choose Option A or Option B; they carry the same weight and the same rubric, and you say which you picked.

Option A: On the course's illustrative ferry, the town's only ferry sells 8 hundred tickets a day at 12 dollars, where a competitive crossing would sell 16 hundred tickets at 4 dollars, and the monopoly leaves a deadweight loss of 32 hundred dollars a day. Suppose a second company asks the town for a license to run a rival boat. One view holds that the town should grant it: a rival would push the fare down toward cost, win back trips riders now skip, and shrink the deadweight loss. Another view holds that the town should keep one ferry: one boat may carry everyone more cheaply than two boats splitting the riders, and the town could regulate the fare instead. Should the town grant the second license, and why? Keep your positive claims (what the model shows) apart from your normative ones (what the town ought to do).

Option B: A patent gives an inventor the sole legal right to sell an invention for a period of years, a barrier to entry the law creates on purpose. Choose a kind of patented product you know something about, such as a new medicine, a seed variety, a medical device, or a feature in a phone, and describe in words who gains and who pays while the patent lasts. Then argue whether the temporary market power is a fair price for the invention, or too high a price for buyers. Label which parts of your answer are positive claims and which are normative judgments, and say what fact would change your mind. Do not invent prices, dates, or statistics; describe what you know.

There is no single right answer. Economists and voters weigh lower prices now against lower costs and new inventions later in different ways. Pick the one you actually care about, and tell us your reasoning.

Expectations

Activity format: one initial post followed by two substantive peer replies. Plan on about 45 minutes across the two deadlines; your instructor sets both due dates in Canvas.

Your initial post — by the first due date (early in the module week):

• Say which option you chose.
• For Option A, say whether the town should grant the second license, using the ferry's numbers (8 hundred tickets at 12 dollars against 16 hundred at 4, a profit of 64, and a deadweight loss of 32); for Option B, name the kind of patented product and describe in words who gains and who pays while the patent lasts.
• Give the strongest version of the view you disagree with in one or two sentences, and say why you still hold your position or what part of the other view you accept.
• Use at least two of this week's terms (barrier to entry, market power, marginal revenue, deadweight loss) correctly.
• Label at least one of your claims as positive (what the model shows) and at least one as normative (what ought to be done).
• Length: roughly 150–250 words if written. You may instead record your post as audio or video (about two minutes) and attach a transcript; both forms are scored by the same rubric.

Your replies — by the second due date (the end of the module week):

• Reply substantively to at least two classmates.
• A substantive reply does more than agree: point out where a post counts the ferry's profit as deadweight loss, check whether a post applied P = MC to the single seller, or argue the other side of the question at its strongest. "Nice point!" on its own does not count.

What a strong post looks like:

I chose Option A. The positive part: the single ferry sells 8 hundred tickets at 12 dollars where competition would sell 16 hundred at 4, and the 32 of deadweight loss is trips riders would pay more than cost for but never take. The normative part: I think the town should grant the second license, because I weigh riders' lost trips heavily. The strongest objection is that two boats might each run half empty and cost more per rider. I accept that risk, so I would want the town to compare the cost of two boats with a regulated fare first.

Notice how it keeps the profit apart from the deadweight loss, labels the positive and the normative parts, and gives the other side its strongest form. Someone who argued for keeping one ferry as carefully would meet the same bar.

Participation rubric

This discussion is worth 10 points. The three criteria below look at your initial post and your peer replies.

Post early if you can — the best threads happen when people have time to reply before the second due date.

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