Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 21, Problem 1DQ
To determine
Antitrust policy and industrial regulation approach towards monopoly .
Expert Solution & Answer
Explanation of Solution
In order to achieve efficiency, the government promotes competition in a market economy. The antitrust laws are used to maintain competition and preventing firms to create higher power in the process of creating monopoly. So, they use mergers or they take necessary action against the firms that misuse their power of being a monopoly.
The industrial regulation is used mainly in the cases of a natural monopoly. Here, the government will analyze the industry structure, the firm’s cost structure, the impact on the consumers and competitors due to the firm’s actions, technology used in the industry and the probability of a new competitor entering the industry and then regulate their operations.
Economics Concept Introduction
Concept Introduction
Monopoly: Monopoly refers to the market structure with the features of a single seller and more buyers. The firms have full control over the market. The price is fixed by the monopoly producer. There is a restriction for entry of the firm. Hence, there are no substitute goods available in the market.
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Q15:
Refer to Figure 6-1 i
Describe the area representing the deadweight loss to society due to monopoly. What curves is it between and/or above and/or below? Between what prices and/or quantities, if applicable? It may help to say why this is a loss to society.
A pure monopoly sells 6 units of a product per day at a unit price of $15. If it lowers the price to $14, its total revenue increases by $22. This implies that its sold output increases by _____. rev: 05_15_2018
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