9. Study Questions and Problems #9Assume a regulatory agency is given authority over prices and entry conditions for a given industry. Also assume that the agencydecides to allow new entry, as the Civil Aeronautics Board (CAB) did before airline deregulation, only when it is proven to be "necessary."This will reduce competition and drive up prices, hurtingNew entrantsExisting regulated firmsO ConsumersThis condition is expected to favor:

There are several ramifications when a regulatory body controls industry pricing and entrance…

Answered: 9. Study Questions and Problems #9…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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7. If a firm practices first-degree price discrimination, the firm must: (a) have customers with identical demand curves. (b) have complete information about each customer's unique demand curve before the customer buys the product. (c) be able to identify each customer's demand curve after the customer buys the product. (d) lack market power but know how its customers differ by their willingness to pay for the product. (e) (b) and (d) (f) (a) and (c) (g) (a) and (b) (h) (c) and (d) Answer: 7b.
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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?
7. Regulating a natural monopoly Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services and the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves. 100 90 80 70 60 ATC A MC 10 MR D 10 12 14 16 18 20 QUANTITY (Thousands of subscriptions) Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits without constraints. PRICE (Dollars per subscription
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Questión 10 óf 18 Holiday Beach is a world-renowned beach operated by Holiday Town. The beach is remotely located and the only parking area for the beach is controlled by the town government. The graphs depict the marginal revenue (MR) and demand (D) for daily parking passes for tourists and residents. Tourists Residents Price per day Price per day $20 $207 18 18 16 14 14 12 12 D 10 - 10 8 8 6 6 MR 4 4 MR 2 1 2 3 4 6. 7 8 9. 10 1 2 3 4 7 8 9 10 Quantity of passes Quantity of passes Suppose Holiday Town issues registration plates to its residents to make it easy to determine which cars belong to residents and which cars belong to tourists. Assume the marginal cost of providing a daily parking pass is a constant $4 and Holiday Town wishes to price discriminate. What price will town residents be charged for a daily pass? $ %24
PRICE (Dollars per subscription) 100 90 80 70 60 50 40 30 20 10 0 0 2 4 Pricing Mechanism Profit Maximization " 6 10 12 14 QUANTITY (Thousands of subscriptions) Marginal-Cost Pricing Average-Cost Pricing T 8 Complete the first row of the following table. MR O True O False Suppose the government has elected not to impose regulations on the industry, and so the firm faces no regulatory constraints in maximizing profits. 16 Complete the second row of the previous table. ATC MC Complete the third row of the previous table. D 18 20 Short Run Price Quantity (Subscriptions) (Dollars per subscription) Suppose now that the government decides to require the monopolist to set its price equal to marginal cost. Profit Suppose now that the government decides to require the monopolist to set its price equal to average total cost. Long-Run Decision True or False: Over time, the internet service provider has a very strong incentive to lower costs when subject to average-cost pricing regulations.
19. A monopoly is a market in which there is only one seller. This situation hurts consumers (buyers). But how, precisely? Explain the things that a monopoly does that hurt consumers.
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Course: Microeconomics 2 - Discrimination type II: price by consumption levelTrue / False / Uncertain type questions 1. If a company applies strategy "take 3 and pay 2", then it can be said that it applies type II discrimination. Please justify and graph if applicable2. If a company increases its packaging capacity by 30% and its selling price by 30%, then it is not applying type II price discrimination. Please justify and graph if applicable3. If a monopolistic firm operates at full capacity, it should not apply type II price discrimination. Please justify and graph if applicable4. Type II price discrimination generates more consumer surplus than type I discrimination. Please justify with a graph

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