|INSTRUCTOR DISCUSSION NOTES:
The Internet, the Post Office, and FedEx-New Best Buds
1. Why does the creation of FedEx SmartPost increase profits for both FedEx and the USPS?
FedEx can concentrate on long-distance shipping, and the USPS can concentrate on home delivery. Each has a comparative advantage in what it does, so the profits of each increase.
2. As these synergistic relationships continue, what will happen to consumer and producer surplus?
Both consumer and producer surplus should increase. Have students draw graphs to show this.
3. Do you think that this is an indication that the USPS will always be around, even as people argue that it should be disbanded? Why or why not?
Have students focus on the impact of the telegraph, telephone, fax machine, and other innovations on the USPS over time.
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