ECONOMICS - UPDATED
20th Edition
ISBN: 9781259795862
Author: McConnell
Publisher: MCGRAW-HILL CUSTOM PUBLISHING
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Question
Chapter 21, Problem 2DQ
To determine
The Sherman and Clayton acts.
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Students have asked these similar questions
10. Questionable business practices according to antitrust agencies
Complete the following table by indicating whether each of the scenarios describes the concept of tying, resale price maintenance, or predatory
pricing.
Resale Price
Maintenance
Predatory
Pricing
Scenario
Tying
Televix is a firm that produces televisions. Suppose Televix sells its televisions to retail stores for $900
each and requires those retailers to charge customers at least $930 for each television.
Book Bound sells a wide variety of books to retail bookstores. Book Bound recently published two new
books: a popular mystery novel and a much less popular history book. Book Bound requires bookstores
to buy 15 copies of the history book for every 120 copies of the mystery novel ordered.
Coolaire is the only firm producing refrigerators. It costs $950 to produce a refrigerator, and Coolaire sells
each refrigerator for $1,200. After Chillbox, a new firm with the same costs as Coolaire, enters the
market for…
10. Questionable business practices according to antitrust agencies
Complete the following table by matching each of the scenarios to the concept of resale price maintenance, predatory pricing, or tying.
Predatory
Pricing
Scenario
SnapFace is a firm that manufactures polaroid cameras. Suppose SnapFace sells its polaroid
cameras to online retailers for $159 each and requires those online retailers to charge at least
$179 to shoppers for each polaroid camera.
Breezy Hut is the only firm producing air conditioners. It costs $1,000 to produce one air
conditioner, and Breezy Hut sells each air conditioner for $1,200. After Gregale, a new firm with
the same costs as Breezy Hut, enters the market for air conditioners, Breezy Hut starts selling its
air conditioners for a price of $550.
Wally's sells a wide variety of skateboards to retail sporting good outlets. Wally's recently rolled out
two new skateboards: a popular Dallas II and a much less popular Drydeck 3. Wally's requires
sporting good…
Price (dollars per unit)
30
24
21
18
16
12
O
4
$12 to $18.
$18 to $24.
$12 to $18.
a
$12 to $24.
8
MR
b
12
LRAC (inflated)
LRAC
MC
In the above figure, if the natural monopoly is regulated using an average cost pricing rule, but the firm can pad its costs and make
the regulator believe its costs are LRAC (inflated), then the price the firm charges will increase from
D₁
20
16
Quantity (millions)
Knowledge Booster
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