Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134421315
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 17, Problem 3.2P
To determine
Why the national restaurant chains find it beneficial to locate inside the largest airports.
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Suppose the local electrical company, a legal monopoly based on economies of scale, was split into four firms of equal size, with the
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Google dominates online search options and advertising. Some contend Google is a monopoly. First, consider competition and answer these questions:
Is Google protected by a barrier to entry, and If so, which barrier(s)?
Is there a viable substitute for Google?
Second, consider whether Google is a monopoly or not.
How does Google’s control of the market influence market price and market quantity?
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How do we test these hypotheses?
Many European governments are reluctant to allow online betting in an attempt to protect their national gambling businesses. A recent study found that seven countries out of the 27 in the European Union banned online gambling. Of the other 20 only 13 have opened their markets to competition; in the rest gambling is dominated by monopolies owned or licensed by the government. In the Netherlands, for example, residents can only place online bets with a state monopoly: De Lotto. The Ministry of Justice even warned banks in the country that they could be prosecuted if they transferred money to online gambling companies. Other countries have ordered online betting companies to block access to their sites. Their governments argue that this is to protect people from gambling excessively. However the revenue they gain from their own monopolies should not be ignored as a possible motive.
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If governments believe that gambling is bad for their citizens then in economic terms how would…
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Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
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- How much is total surplus if the market is perfectly competitive?How much is total surplus if the market is controlled by a single price monopolist?Suppose the single price monopolist started charging all customers the maximum price they are willing to pay. How much additional surplus is created?arrow_forward1. Which of the following companies most closely resembles a monopoly? Walmart Microsoft Starbucks McDonald's Question Source: Chiang 4e - Economics Princip 39 36 近arrow_forwardThe three graphs below illustrate the market for electricity. The distribution of electricity is a natural monopoly; therefore, to take advantage of lower production costs, it is efficient to have only one firm in the market. Unfortunately, if a monopoly were allowed to provide electricity, it would charge a higher price and provide a smaller amount of electricity than would be desirable. In other words, the unregulated monopoly would charge the monopoly's profit-maximizing price. To avoid this, the government will allow a single firm to provide electricity, but the government will regulate the price. Let’s compare possible regulatory solutions.arrow_forward
- Question 4: The Baxter brothers - Bob, Bill, Ben and Brad – have just made a documentary movie about their basketball team. They are thinking about making the movie available for download on the internet. They can act as a monopolist if they choose to do so. Each time the movie is downloaded, their Internet Service Provider charges them a fee of $4. The Baxter brothers are arguing about which price to charge the customer per download. Here is the demand schedule for their film: Quantity of Downloads Denanded Price of Download $10 4 6. 2 10 15 a) Calculate the total revenue and marginal revenue per download. Price Quantity TR MR $10 6. 3 10 15 b) Bill is proud of the film and wants as many people as possible to download it. What price would he choose? How many downloads would be sold? c) Bob wants as much total revenue as possible. What price would he choose? How many downloads would be sold? d) Ben wants to maximize profits. What price would he choose? How many downloads would be sold?…arrow_forwardMost smartphones in the United States use Apple's IOS or Google's Android operating system. What market structure applies to the market for smartphone operating systems? Why?arrow_forwardI already have a clue how I would answer this question, but Pearson is very particular with how I label and draw the correct points. Could you help me, please?arrow_forward
- econ 3144arrow_forwardA monopoly, unlike a perfectly competitive firm, has some market power. Thus, it can raise its price, within limits, without quantity demanded falling to zero. The main way monopolies retain their market power is through barriers to entry, which prevent other companies from entering monopolized markets and competing for customers. Consider the market for taxi services. In order to own and operate a taxi, drivers are required to obtain a taxi medallion. Which of the following best explains the barriers to entry that exist in this scenario? Increasing returns to scale Control over an important input O Legal barriersarrow_forwardMelCo’s Xamoff The global pharmaceuticals giant, MelCo, has had great success with Xamoff, and over-thecounter medicine that reduces exam-related anxiety. A patent currently protects Xamoff from competition, although rumors persist that similar products are in development. Two years ago, MelCo sold 25 million units for a price of $10 for a package of ten. Last year it raised the price to $11, and sales fell to 22 million units. Finally, a financial analyst estimates the cost of production at $2 per package. (a) Estimate the elasticity of demand for this product at $10. Is this price too high or too low? (b) Estimate the elasticity of demand for this product at $11. Is this price too high or too low? (c) Based on your answers to (a) and (b), what can we say about MelCo’s profit-maximizing price?arrow_forward
- Suppose a monopoly is producing at its profit-maximising (loss-minimizing) quantity, and the price corresponding to this quantity is below average total cost but above average variable cost. The monopoly will shut down in the short run but return to production in the long run shut down in the short run and exit the market in the long run keep producing both in the short run and in the long run keep producing in the short run but exit the market in the long run None of the above.arrow_forwardFor people with life-threatening allergies, carrying a device that can automatically inject epinephrine (called an autoinjector) is a necessity. In the summer of 2016, Mylan, the maker of the widely used autoinjector EpiPen, found itself with a virtual monopoly. A year earlier its primary competitor, Auvi-Q, was recalled amid fears that it would malfunction and deliver the wrong dose. In addition, the FDA denied the drug producer, Teva, from releasing a generic autoinjector. Prior to these events, a two-pack EpiPen sold for approximately $100. But during that summer, Mylan raised the price to over $650 per pack, leading to extensive news coverage, popular online petitions, and outrage on the part of consumers. Mylan countered that many consumers received their EpiPens through their medical insurance, hence they were protected from the price increase. For those who didn't have insurance coverage and had to pay the full price, Mylan offered a $300 savings card. a. In the graph, shade the…arrow_forwardI am intrigued by the following article detailing how Nestle agreed to pay Starbucks $7.2B to distribute and sell Starbucks’ packaged coffees and teas around the world. Why would Nestle purposely put its competitors’ brands right next to it in the store, and then pay them for the privilege? Why wouldn’t Starbucks just take care of distributing its own brands rather than go through Nestle? Please explain how this outcome could be profit maximizing for both firmsarrow_forward
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