MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
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Chapter 15, Problem 14QE
To determine
The basis of judgment for the standard oil and the ALCOA cases.
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Quiz (Ch. 11)
Question 7
chadron.instructure.com
O Microsoft won and its practices were not classified as restrictive.
How would you calculate
The Microsoft antitrust case covered in your textbook embodies many of
the gray areas in restrictive practices. Antitrust regulators accused
Microsoft of numerous offenses. What was the end result?
Ć
1 pts
O The federal government regulators finally dropped their case because the case
was too complex to prove.
O Microsoft appealed a federal court decision to break up the company and
reached a settlement with the government that it would end its restrictive
practices.
O The federal government won its case, and Microsoft was broken into several
smaller companies.
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…
Chapter 15 Solutions
MICROECONOMICS
Ch. 15.1 - Prob. 1QCh. 15.1 - Prob. 2QCh. 15.1 - Prob. 3QCh. 15.1 - Prob. 4QCh. 15.1 - Prob. 5QCh. 15.1 - Prob. 6QCh. 15.1 - Prob. 7QCh. 15.1 - Prob. 8QCh. 15.1 - Prob. 9QCh. 15.1 - Prob. 10Q
Ch. 15 - Prob. 1QECh. 15 - Prob. 2QECh. 15 - Prob. 3QECh. 15 - Prob. 4QECh. 15 - Prob. 5QECh. 15 - Prob. 6QECh. 15 - Prob. 7QECh. 15 - Prob. 8QECh. 15 - Prob. 9QECh. 15 - Prob. 10QECh. 15 - Prob. 11QECh. 15 - Prob. 12QECh. 15 - Prob. 13QECh. 15 - Prob. 14QECh. 15 - Prob. 15QECh. 15 - Prob. 16QECh. 15 - Prob. 17QECh. 15 - Prob. 18QECh. 15 - Prob. 1QAPCh. 15 - Prob. 2QAPCh. 15 - Prob. 3QAPCh. 15 - Prob. 4QAPCh. 15 - Prob. 5QAPCh. 15 - Prob. 1IPCh. 15 - Prob. 2IPCh. 15 - Prob. 3IPCh. 15 - Prob. 4IPCh. 15 - Prob. 5IPCh. 15 - Prob. 6IPCh. 15 - Prob. 7IP
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Similar questions
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- Which of the following is true of antitrust laws in the United States? Group of answer choices Economists unanimously agree on the usefulness of antitrust action to increase the competitiveness of industries. They were embedded in the U.S. Constitution but mostly eliminated in the early 1900s. The Sherman Act in 1980 eliminated and repealed all existing U.S. anti-trust laws. Historically they have been abused by some competitors going after other competitors in ways that are detrimental to consumers.arrow_forward#7. Your company sells widgets. There is only one other firm in the market: Bear Widgets. Demand for your product depends upon your price, your quantity, and the price that Bear Widgets charges (Pgear). You think that Bear Widgets will either charge $10 or $20. What should you do if their price will be $20? Demand: P = 50 – Q + 0.5P3ear Marginal costs: MC = 2Q %3D a. Produce Q = 20 b. Produce Q = 18.33 c. Produce Q = 16.67 d. Produce Q = 15 %3D e. Produce Q = 13.75arrow_forwardContrast the outcomes of the Standard Oil and U.S. Steel cases. What was the main antitrust issue in the DuPont cellophane case? In what major way do the Microsoft and Standard Oil cases differ?arrow_forward
- What is the perfect methodology to analyze Airlines industry in term of price discrimination? This is not an essay question.arrow_forwardAssume that a firm’s marginal cost of production is $20 and the price charged to consumers is $25. Antitrust agencies use this information to estimate the firm’s monopoly power. What is the value of the Lerner Index in this example?a. 0.80 b. 0.25 c. 0.20arrow_forwardIn antitrust law, "price-fixing" refers to Multiple Choice O a company paying its suppliers a fixed price for certain inputs. a company fixing the price of its own product regardless of the degree of competition. competitors colluding to set their prices collectively. the government fixing the prices of products of antitrust violators.arrow_forward
- According to the Justice Department guidelines, mergers in an industry are seldom challenged if the industry O has a pre-merger HHI less than 1500 would have a post-merger Herfindahl-Hirschman Index (HHI) less than 1500 has a post-merger HHI of 10,000 would have a post-merger HHI greater than 2500 has a pre-merger HHI of less than 2500arrow_forwardA pharmaceutical company with a patented drug faces demand curves of Qus =250,000-5,000Pus and QCA =150,000-4,000PCA- Suppose international drug sales are illegal and the marginal cost is 2. What will the company charge Canadian consumers and how much will be demanded? Would a law to make international sales legal help US consumers? What about Canadian consumers? Would the firm holding the patient oppose th law? (no calculations are needed in the last three questions)arrow_forwardRegulation of coal falls solely under provincial jurisdiction because it is a natural resource. Select one: True Falsearrow_forward
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