Monopoly: Around the WorldThere are 38 nearly identical ABC stores within a one-mile radius in Waikiki. The combined size of these 38 stores allowsABC to offer large quantities at favorable prices.Antitrust laws are designed to maintain competition and prevent monopolies from developing.a. One reason antitrust laws exist is that monopolies tend to produceoutput and chargeprices than firms in perfectly competitive industries.lesshighermorelowerb. АВСoperates as a natural monopoly and is therefore subject to regulation.operates in a contestable market and is therefore unlikely to charge high prices.is subject to price caps, regulating the prices it can charge.has no competition, or threat of competition, which limits its market power.O O O O Consider a hypothetical demand schedule for monosodiumQuantity of MSG demanded(millions of pounds)Price of MSGglutamate (MSG). Suppose that Ajinomoto holds 50% of($ per pound)the market, Jiali holds 30% of the market, and Quingdao$8holds 20% of the market.$720Suppose the three firms agree to form a cartel to fix$630production of monosodium glutamate. Assume marginalcost equals zero, and the output is split equally across$540$460the firms,$390$2110What quantity maximizes the cartel's profit?$1180SO300110 million pounds90 million pounds300 million pounds20 million poundsSuppose Ajinomoto's marginal cost remains equal to zero,but for Jiali and Quingdao, marginal costs rise above zero.How would this affect the incentive of Ajinimoto to actnoncooperatively and change its output?Ajinomoto will have an incentive to increase itsoutput of MSG.Ajinomoto will not have an incentive to changeits output.Ajinomoto will have an incentive to decrease itsoutput of MSG.

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There are 38 nearly identical ABC stores within a one-mile radius in Waikiki. The combined size of these 38 stores allows ABC to offer large quantities at favorable prices. Antitrust laws are designed to maintain competition and prevent monopolies from developing. a. One reason antitrust laws exist is that monopolies tend to produce output and charge prices than firms in perfectly competitive industries. less higher more lower b. АВС operates as a natural monopoly and is therefore subject to regulation. operates in a contestable market and is therefore unlikely to charge high prices. is subject to price caps, regulating the prices it can charge. has no competition, or threat of competition, which limits its market power.

There are 38 nearly identical ABC stores within a one-mile radius in Waikiki. The combined size of these 38 stores allows ABC to offer large quantities at favorable prices. Antitrust laws are designed to maintain competition and prevent monopolies from developing. a. One reason antitrust laws exist is that monopolies tend to produce output and charge prices than firms in perfectly competitive industries. less higher more lower b. АВС operates as a natural monopoly and is therefore subject to regulation. operates in a contestable market and is therefore unlikely to charge high prices. is subject to price caps, regulating the prices it can charge. has no competition, or threat of competition, which limits its market power.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Monopoly

Section: Chapter Questions

Problem 2.3P

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