Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Chapter 16, Problem 2.1CE
a.
To determine
To describe: The reason responsible for the violation of the antitrust laws in the USA.
b.
To determine
To describe: The reason responsible for the violation of the antitrust laws in the USA.
c.
To determine
To describe: The reason responsible for the violation of the antitrust laws in the USA.
d.
To determine
To describe: The reason responsible for the violation of the antitrust laws in the USA.
e.
To determine
To describe: The reason responsible for the violation of the antitrust laws in the USA.
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Students have asked these similar questions
In 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.
Based on the best available econometric estimates, the market elasticity of demand for your firm's product is -2. The marginal cost of producing the product is constant at $150, while average total cost at current production levels is $225.
Determine your optimal per unit price if:
a. you are a monopolist
b. you compete against one other firm in a Cournot oligopoly
c. you compete against 19 other firms in a Cournot oligopoly
Problem 5: Policy Analysis. A refrigerator monopolist would charge a price of 60 and
sell 40 refrigerators. Its average cost would be 20. An antitrust authority decided that if
there are five refrigerator suppliers, then price would be equal to average cost. With five
suppliers, the price is 30, average cost is also 30, and the number of refrigerators produced
is 70.
(a) Assume that demand curve is linear, that is, Q = a – bP. What is the demand curve?
What is the consumer surplus in a monopolistic industry? What is the consumer
surplus in the industry with five firms?
(b) How much is the producer surplus is a monopolistic industry? How much is the pro-
ducer surplus in the industry with five firms?
(c) If the antitrust authority wants to maximize net surplus, which market structure will
it choose? A monopoly or a five firm industry?
Chapter 16 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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- (1A) Say the government places regulation on a natural monopolist so that for its product it can only set its price so high, e.g. a price ceiling. What is this type of regulation called? Price-cap regulation Cost-plus regulation Breakeven regulation (1B) Which of the following describes the typical shape of the monopolist's total cost curve? (a) Total costs decrease and become flatter as output rises.(b) Total costs are typically constant and are shown by a straight horizontal line.(c) Total costs rise and grow steeper as output rises. (1C) Which of the following statements is true about price discrimination In the United States. (a)Price discrimination is permitted.(b)Price discrimination is illegal.(c)Price discrimination is supported. (1D) In the economy, allocative efficiency takes place (a)when goods and services production is at their lowest costs.(b)when the mix of goods and services is at its ideal or optimal.(c) when deadweight loss of goods and services in an economy…arrow_forward(b) Consider a monopoly firm producing chemicals facing a demand curve given by P = 520 – 2Q. The firm's total costs can be expressed as TC = 100Q + Q<+ 20 and marginal revenue as MR = 520 -4Q, where Q denotes the level of output. Given the above information, what is the firm's profit maximizing price and output?arrow_forwardPrice, Cost P4 P3- P2 P₁- MR ATC MC D Q₁ Q₂ Q3 Q4 Quantity The graph above shows the cost and revenue curves for a natural monopoly that provides electrical power to the town of Fanaland. If unregulated, the monopolist operates to maximize its profit. (a) Identify the monopolist's profit-maximizing quantity and price. (b) Assume the town government of Fanaland regulates the monopolist's price to achieve the allocatively efficient quantity. What price would the government set in order to achieve the allocatively efficient quantity? Explain. (c) Will producing the allocatively efficient quantity be economically feasible for the monopolist? profit? (d) Suppose instead the town government wants to regulate the monopolist to earn zero economic profit. What price would the government set to have the monopolist earn zero economic that of the unregulated monopolist? Explain: (e) Based on your answer to part (d), will the deadweight loss increase, decrease, or stay the same asarrow_forward
- Suppose that Brooks, Inc. and Spring, Inc. form a joint venture, River Company, whose utility pumps replace the output sold by the parent companies in the domestic market. Assuming that River Company operates as a monopolist and that its costs equal MC0 = AC0, what is: (f) Assume River Company’s formation leads to technological advances that yield cost reductions, such that MC1 = AC1. Compared to the original equilibrium (in (a)), what is the net effect of River Company’s formation on welfare? (Calculate the new total surplus (consumer surplus + producer surplus), and take the difference from your answer to (a).) (g) Assume River Company’s formation leads to wage concessions from River Company employees, such that MC1 = AC1. Compared to the original equilibrium, what is the net effect of River Company’s formation on welfare? (h) Assume River Company’s formation leads to changes in work rules that lead to higher worker productivity, such that MC1 = AC1. Compared to the original…arrow_forwardRefer to Figure 15-5. Part a) A profit-maximizing monopoly's profit is equal to: a) P2 x Q3. b) (P2-P4) x Q3. c) (P1-P6) x Q1. d) (P2-P5) x Q3. Part b) A profit-maximizing monopoly will produce an output level of a) Q3. b) Q4. c) Q2. d) Q1. Part c) A profit-maximizing monopoly will charge a price of Question 22 options: a) P2. b) P4. c) P1. d) P3.arrow_forwardIn general, consider the following three market structures: (a) perfectly competitive market (b) single-price monopoly (c) first-degree price-discriminating monopoly Sort these market structures into the appropriate bin below based on efficiency level. Items (3 items) (Drag and drop into the appropriate area below) first-degree price- discriminating monopoly Categories single-price monopoly perfectly competitive market Most Efficient Drag and drop here Least Efficient Drag and drop herearrow_forward
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