MICROECONOMICS-MINDTAP (1 TERM)
13th Edition
ISBN: 9780357686942
Author: Arnold
Publisher: CENGAGE L
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Chapter 12, Problem 2QP
To determine
Explain the difference in the antitrust policy implementation when the market is defined narrowly or broadly.
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As a result of globalization and new information and communications technology, would you expect that the definitions of markets that antitrust authorities use will become broader or narrower?
How antitrust policy and industrial organization is related?
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The Sherman Act in 1980 eliminated and repealed all existing U.S. anti-trust laws.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.
Chapter 12 Solutions
MICROECONOMICS-MINDTAP (1 TERM)
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- To what extent would you consider the setting up of regulatory bodies an appropriate and effective solution to the principal-agent problem in markets where there is a natural monopoly?arrow_forwardAccording to the article “A Brief History of Mergers and Antitrust Policy” by Edward Herman, what are two reasons in supportof antitrust policy? What are two arguments in oppositionto antitrust policy put forth by the “Chicago school”?arrow_forwardAntitrust policy is designed to?arrow_forward
- Unsure which is the correct answer The Clayton Act of 1914 classifies several business practices as illegal, including price discrimination and tying contracts, if they "substantially lessen competition or tend to create a monopoly." The Clayton Act of 1914 is an example of which of the following? Price regulations or antitrust lawsarrow_forwardDescribe the major provisions of the Sherman and Clayton acts. What government entities are responsible for enforcing those laws? Are firms permitted to initiate antitrust suits on their own against other firms?arrow_forwardWhy was the Clayton Act of Antitrust passed?a) To replace the Sherman Act of Antitrustb) To replace the Trade Actc) To clarify the Federal Trade Commission Actd) To clarify and elaborate on the Sherman Act of Antitrustarrow_forward
- U.S. antitrust laws are designed to prohibit monopolization and encourage competition. Why, then, does the government erect barriers to entry and create monopoly power by granting firms patents?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_forwardHow does the antitrust treatment of price discrimination, tying contracts, and exclusive dealing contracts in the European Union compare with their treatment in the United States?arrow_forward
- According to the Federal Trade Commission, “Many mergers benefit competition and consumers by allowing firms to operate more efficiently. But some mergers change market dynamics in ways that can lead to higher prices, fewer or lower-quality goods or services, or less innovation.” Antitrust laws often allow the former pro-competitive types of mergers, but prohibit the latter anti-competitive types. Suppose that one looks over the historical record of antitrust enforcement and finds that while the authorities have permitted some mergers and blocked others, the industry’s average price has tended to fall whenever a merger has been permitted and occurred. a) Based solely on the information provided above, is it correct then to infer that the antitrust authorities should have been more lenient and permitted more mergers? Why or why not? b) Based solely on the information in the question, is it likely that these merged firms sell products that are substitutes or complements? Whyarrow_forwardWhat is the most controversial aspect of Antitrust regulation? Group of answer choices Defining the allowable size the merged firm should be. Defining a market Sending violators to jail. Agreeing on which concentration measurement to use.arrow_forwardAnswer the given question with a proper explanation and step-by-step solution. Why is it important for the United States to have laws such as the Sherman Antitrust Act and the Clayton Antitrust Act? Can you describe corporations today that are taking such a large part of market share that it's difficult for smaller companies to enter the market?arrow_forward
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