Principles Of Economics 2e
2nd Edition
ISBN: 9781680920864
Author: Timothy Taylor, Steven A. Greenlaw, David Shapiro
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 11, Problem 26RQ
Why does regulatory capture reduce the persuasiveness of the case for regulating industries for the benefit of consumers?
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Which of the following is not one of the three basic situations in which regulation is imposed?
a.
externalities
b.
natural monopoly
c.
price fixing
d.
imperfect information
Given what you know about regulatory capture, can you describe a possible scenario where accusations of restrictive practices ends up limiting competition, rather than extending it?
When governments deregulate an industry, using economic theory, explain what governments want to achieve in terms of social-well being.
Chapter 11 Solutions
Principles Of Economics 2e
Ch. 11 - Is it true that a merger between two films that...Ch. 11 - Is it true that the four-firm concentration ratio...Ch. 11 - Some years ago. two intercity bus companies,...Ch. 11 - As a result of globalization and new information...Ch. 11 - Why would a firm choose to use one or more of the...Ch. 11 - Urban transit systems, especially those with rail...Ch. 11 - From the graph you drew to answer Exercise 11.6,...Ch. 11 - What real world changes made the deregulation...Ch. 11 - What are some of the benefits of the deregulation?Ch. 11 - What might some of the negatives of deregulation...
Ch. 11 - What is a corporate merger? What is an...Ch. 11 - What is the goal of antitrust policies?Ch. 11 - How do we measure a four-firm concentration ratio?...Ch. 11 - How do we measure a Herfindahl—Hirshman Index?...Ch. 11 - Why can it be difficult to decide what a market is...Ch. 11 - What is a minimum resale price maintenance...Ch. 11 - What is exclusive dealing? How might it reduce...Ch. 11 - What is a tie-in sale? How might it reduce...Ch. 11 - What is predatory pricing? How might it reduce...Ch. 11 - If public utilities are a natural monopoly, what...Ch. 11 - If public utilities are a natural monopoly, what...Ch. 11 - What is cost-plus regulation?Ch. 11 - What is price cap regulation?Ch. 11 - What is deregulation? Name some industries that...Ch. 11 - What is regulatory capture?Ch. 11 - Why does regulatory capture reduce the...Ch. 11 - Does either the four-firm concentration ratio or...Ch. 11 - What would be evidence of serious competition...Ch. 11 - Can you think of any examples of successful...Ch. 11 - If you were developing a product (like a web...Ch. 11 - In the middle of the twentieth century, major U.S....Ch. 11 - Why are urban areas willing to subsidize urban...Ch. 11 - Deregulation, like all changes in government...Ch. 11 - Do you think it is possible for government to...Ch. 11 - Use Table 11.5 to calculate the four-firm...Ch. 11 - Use Table 11.5 and Table 11.6 to calculate the...Ch. 11 - If the transit system were allowed to operate as...Ch. 11 - If the transit system were regulated to operate...Ch. 11 - If the transit system were regulated to provide...
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- In some regulated industries, regulatory agencies pre-vented prices from falling, and as a result many firms opened for business in those industries. Is this kind of regulation competitive or anticompetitive? Is it a good idea or a bad one?arrow_forwardDo you think that electronic cigarettes should be taxed and regulated like conventional cigarettes? Explain.arrow_forwardIn this question, you will discuss the general case of positive externalities in a monopolist’s presence. what is the impact of a monopolist’s presence on a market without positive externalities? Does monopolist hurt the overall social gain (i.e., total surplus or total welfare)? Please explain. Could a monopolist improve the competitive market outcome for a good or a service with positive externalities (and no government intervention to correct it)? Why or why not? Please explain.arrow_forward
- Suppose regulators are deciding how the local electric company is allowed to set prices. Demand for electricity is given by P = 40-Q, where Q is millions of megawatt hours demanded annually. The electric company is allowed to operate as a monopoly. The marginal cost of the company is $2, while the fixed cost is $150 million annually. (a) If the price of the electric company was not regulated, what price would it set? What would be its profits and the deadweight loss? (b) Knowing the fixed cost, demand curve, and marginal cost of the utility, the regulator decides to set a linear price that allows the electric utility to break even. What is this price? What would be the deadweight loss? (c) Suppose that demand for electricity varies over the course of the day and is most inelastic in the middle of the day. Illustrate how the regulator could use this information to improve on the outcome in (b)? Would there be any challenges that would prevent regulators from using the prices you…arrow_forwardExplain in brief. a) Why government should intervention in a monopoly market. b) Give a practical example of government intervention in the monopoly market.arrow_forwardThe figure to the right shows the market demand for electricity and the average total cost and marginal cost of producing electricity for a utility company. Suppose the utility company is a regulated natural monopoly. If government regulators want to achieve economic efficiency, then they will regulate a price of $ —— per kilowatt hour. (Enter a numeric response using a real number rounded to two decimal places.)arrow_forward
- When selling downloadable software, e-books, and music streaming platforms, the marginal cost of making one more unit is basically zero. The average total cost is currently $1 per book. If a monopoly is operating in this market and is maximizing profits, marginal revenue is Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Greater than $0 Less than $0 $0 d $1 e There is not enough information to answer this question.arrow_forwardIdentify the direct and indirect costs of government regulations as applied through competition policy?arrow_forwardTo what extent would you consider the setting up of regulatory bodies an appropriate and effective solution to the principal-agent problem in markets where there is a natural monopoly?arrow_forward
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