10. Public policy toward monopoliesSuppose that a government that is skeptical of efforts to regulate prices charged by private companies is nevertheless concerned that an electric utilitycompany is taking advantage of consumers with unfair pricing policies.Which of the following policy options might most effectively enable the government to achieve its objectives in this situation?Turn the company into a public enterprise.Regulate the firm's pricing behavior.Use antitrust laws to increase competition.Do nothing at all

Monopoly:A monopoly refers to the market situation where a single seller sells the commodity which…

Answered: 10. Public policy toward monopolies…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1.Some monopolies are regulated by setting a price that a monopolist cannot exceed over a specified period of time. This is called: A)price cap regulation B)regulatory capture C)antitrust laws D) cost-plus regulation 2.Let's say that the equilibrium salary for professors is $70,000/year. If universities pay an average of $90,000/year, we can expect a ___________ of professors. A)shortage B)surplus C)monopoly D)union 3.If college education becomes a requirement for working in a fast-food establishment, we may experience a _____________ in the supply of potential fast-food workers. A)increase B)rightward shift C)decrease D)surge 4.Minimum wage laws are examples of price floors, where an employer is: A)Not allowed to pay wages higher that what is set by the law B)Should pay all workers the minimum wage set by the law C)Not allowed to pay wages lower than what is set by the law D)Not allowed to hire people who asks for wages higher than what is set by the…
8. Suppose there are two firms in the market. The market demand is Q=100-p and the marginal cost of production is constant at 40. What is the outcome of price and quantity and the total welfare if those two firms compete like perfect competition? What is the outcome of price and quantity and the total welfare when those two firms merge into a monopoly? What are the pre-merger HHI, post-merger HHI and change in HHI? How does the Horizontal Merger Guideline 2010 classify this proposed merger?
1-In the table below are the demand and cost data for ECON Drugs, a pure monopolist. Complete the table and columns for total revenue, marginal revenue, and marginal cost. What are the answers to these three questions: (a) At what production output will Econ Drugs produce? (b) What price will ECON Drugs charge? (c) What total profit will the Econ Drugs receive at the profit-maximizing level of output? Quantity Price Total revenue Marginal revenue Total cost Marginal cost 0 $34 $_____ $ 20 1 32 _____ $_____ 36 $_____ 2 30 _____ _____ 46 _____ 3 28 _____ _____ 50 _____ 4 26 _____ _____ 54 _____ 5 24 _____ _____ 56 _____ 6 22 _____ _____ 64 _____ 7 20 _____ _____ 80 _____ 8 18 _____ _____ 100 _____ 9 16 _____ _____ 128 _____ 10 14 _____ _____ 160 ___
2. You run a monopoly firm that serves two types of consumer. Individual type-A consumers have a value of 8 for their first unit of your product, a value of 4 for their second unit, and a value of zero for all additional units. Individual type-B consumers have a value of 5 for a single unit of the product and zero for any additional units. There are 3 type-A consumers and 5 type-B consumers. Your marginal cost is zero. a) If your firm can set only a single per-unit price for any units sold, what price should you choose? What is your total profit? b) If your firm can practice first-degree price discrimination, how many units are sold to each consumer and how much does each consumer pay? What is your total profit?
2. Yardstick competition has been suggested as an alternative method to regulate firms. Define yardstick competition and indicate how it might be implemented. In addition, outline the problems that yardstick competition is designed to address.
5. Individual Problems 9-5 Describe the difference in economic profit between a competitive firm and a monopolist in both the short and long run. Which should take longer to reach the long-run equilibrium? In the short run, both monopolists and competitive firms can competitive firms, but not monopolists earn positive economic profits. In the long run, can earn a positive economic profit. True or False: The adjustment to long-run equilibrium takes the same amount of time for monopolies and competitive industries. True O False
1. When a monopoly advertises, the goal is to _____ because _____. Group of answer choices increase its demand as a share of market demand; the monopoly faces a significant portion of market demand increase market demand; the monopoly faces the entire market demand increase market demand; the monopoly produces a product that is identical to the output of all other sellers in the market increase its demand as a share of market demand; the monopoly faces a small portion of market demand 2. If given a choice, a person would prefer to experience the situation of which of the following families? Group of answer choices a family with income equal to the world poverty line a family with income equal to the United States poverty line a family with income double the world poverty line a family with income equal to the poverty line in the United States in 1970 3. A business using its bargaining power as a major buyer of labor to pay lower prices, including lower wages,…
8.In 2019, competition authorities threw out a merger of Asda and Sainsbury’s. What type of growth would the merger of Asda and Sainsbury’s have represented? a) Horizontal expansion b) Horizontal integration c) Conglomerate merger d) Vertical integration e) Horizontal alliance
3. Consider a monopoly that sells a product to consumers with a constant marginal cost of $13. There are two potential consumers. As a prior belief, each consumer thinks that the product is worth either $29 or $19 with equal probability, and he/she learns the true value of the product after trying it out. Each consumer may have a different perception of the value of the product, and these perceptions are independent events. The product is non-durable. Suppose there are two periods, and each consumer demands at most one unit of the product in cach period. After the first period, a company named InfoteX could conduct an online marketing survey to learn consumers' perceptions of the product. By purchasing the survey from InfoteX, the monopolist knows whether a consumer is happy with the product (i.., he/she thinks the product is worth $29 instead of $19 after trying out) or not, and can offer personalized prices to customers in the second period. Then the monopolist should charge $_ first…
1. Sources of monopoly power A monopolist, unlike a competitive firm, has some market power. It can raise its price, within limits, without the quantity demanded falling to zero. The main way it retains its market power is through barriers to entry-that is, other companies cannot enter the market to create competition in that particular industry. Complete the following table by indicating which barrier to entry appropriately explains why a monopoly exists in each scenario. Barriers to Entry Government- Created Monopolies Scenario Patents are granted to inventors of a product or process for a certain number of years. The reason for this is to encourage innovation in the economy. Without the existence of patents, it is argued, research and development for improved pharmaceutical products is unlikely to take place, since there's nothing preventing another firm from stealing the idea, copying the product, and producing it without incurring the development costs. In the natural gas…
13. What is the economic argument that monopolies are most often less efficient than highly (say, perfectly) competitive producers? for managerial economics class
Give only typing answer with explanation and conclusion.

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