Economics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280595
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Chapter 13, Problem 8DQ
To determine
The industries with a high concentration ratio.
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There are claims saying that free flow of trade prevents monopoly. However, free flow of trade may cause monopoly through predatory pricing. For instance, a foreign industry may dump its goods in a country with free flow of goods strategy. Thus, it forces other rivals out of the market, and will get a monopoly position.
Please provide a counter-argument for the above claim
The pie chart to the right illustrates hypothetical data for the market share for the United States automobile market. The percentage of the U.S. market that U.S. auto firms control is
nothing%.
(Enter your response as an integer.)
The image is a pie chart labeled U.S. Automobile Industry Market Share. The pie chart shows the market share of the United States, Japan, Europe, and Korea in the U.S. automobile industry. The market share of the United States is 45%. The market share of Japan is 30%. The market share of Europe is 15%. The market share of Korea is 10%.
U.S. Automobile Industry Market Share
U.S. 45%Japanese 30%European 15%Korean 10%
To answer this question, you will want to work out the answer using a graph on a piece of scratch paper (not turned in). You are going to compare the outcomes in the case where
there is perfect competition to the monopoly case. So, as an intermediate step, you will need to compute the equilibrium outcomes under competition and monopoly.
Suppose that you have the following information about the demand for oil.
Price ($/barrel)
80
70
60
50
40
30
20
10
Suppose that the marginal cost to produce a barrel of oil is $20.
What is the deadweight loss if the oil market is a monopoly?
Quantity demanded(# barrels)
5
6
7
8
9
10
11
12
Chapter 13 Solutions
Economics: Principles and Policy (MindTap Course List)
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- Based on market research, a film production company in Ectenia obtains the following information about the demand and production costs of its new DVD: Demand: P= 1,200 - 10Q Total Revenue: TR = 1,2000 - 10Q Marginal Revenue: MR 1,200 - 200 Marginal Cost: MC = 300 + 100 where Q indicates the number of copies sold and Pis the price in Ectenian dollars. Complete the following table by finding the price and quantity that maximize the company's profit and the price and quantity that maximize social weifare. Price Quantity Scenario (Dollars) (DVDs) Maximizes the company's profit Maximizes social weifare The deadweight loss from the monopoly is S Suppose, in addition to the foregoing costs, the director of the fim has to be paid. The company is considering four options:arrow_forwardHow does one measure competition in an industry? Can concentration be used as a proxy? What does SCP say about high levels of concentration and low levels of concentration?arrow_forwardIn October 2018 Canada agree to open the dairy market to US producers as part of the new NAFTA agreement (USMCA). Use the following information to find the price and the number of firms in each country's market, and the price and number of firms in the aggregate market. Demand function For country i (i=USA or Canada) P, = 6000 + 25 Cost Function C, = 1,000, 000+ 6000 * Q, For country i (i=USA or Canada) Market size • Market size Canada Scananda = 1,000, 000 • Market size USA S,"S= 4,000, 000 The number of firms in Canada is equal to: Answer: Price in Canada is equal to: Answer: Number of firms in USA is equal to: Answer: Price in USA is equal to Answer: Number of firms in the integrated market is equal to: Answer:arrow_forward
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