LSC CUMBERLAND EC202 MICRO>PKG<
21st Edition
ISBN: 9781260586992
Author: McConnell
Publisher: MCG
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Chapter 21, Problem 3DQ
To determine
Enforcement of antitrust law.
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Chapter 21 Solutions
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- Market Share of Firms in Industry 2 30 10 25 10 10 20 The table shows market shares of firms in hypothetical industries. Assume these are distinct industries with no buyer-seller relationships or competition among them. A merger between Firm 2 and Firm 3 in Alpha would be a Industry Alpha Beta Kappa Delta 1 30 80 25 20 Select one: O a. conglomerate merger. O b. diagonal merger. O c. vertical merger. O d. horizontal merger. 32532 20 20 4 20 3 25 20 5 1 6 1arrow_forward10. 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…arrow_forwardQuestion 17 3아- MC ATC 26 27 26 25 24 AVC 20 MR 100 190 260 300 400 What is the optimal output and price for the prafit maximizing, nondiscriminating monopolist in the exhibit above? O 190 and $30 O 190 and $26 O 190 and $25 O 260 and $28 O 300 and $27 D Question 18 $/9 30- MC ATC 28 27 AVC 26 25 24 D. 2아 MR 100 190 260 300 400 Total cost for this nondiscriminating monopolist at its profit-maximizing output level in the exhibit above is O $7280 O $4750 $5700 None of the choices are correct O $4940 D Question 19 Why is collusian to raise prices highly unlikely among firms in perfectly competitive industries? O All the firms in competitive industries love their consumers too much to ever collude against them O There is only one firm in perfectly competitive industries, so whom would they collude with? • There are too many firms in perfectly competitive industries. O The products are too differentiated for collusion in perfectly competitive industries 3 This is a trick question because…arrow_forward
- 3. Consider a market in which a monopolist would charge at a price of $10 for a particular good. Assume now the market is currently dominated by a pair of Bertrand duopolists who produce identical goods and compete on price in a one-shot game. They both face a marginal cost of $5. They start with colluding and agreeing to charge the monopoly price of $10 in an effort to maximize their profits. In equilibrium, the market price of the good will be.... (a) Over $10 (b) $10 (c) Between $5 and $10 (d) $5 (e) Less than $5 (f) None of the above Answer: 3d. A price war will break out, lowering the price to $5.arrow_forwardQuestion 35 (Table: Three-Country Oil Production) Refer to the table. Suppose that three countries are engaged in oil production. For simplicity, assume zero costs so that revenue equals profit. Assume that country A cheats on the cartel agreement by producing 200 more barrels than the other two countries. What is the resultant profit earned by country A? Market Price 6,000 Total Market Output 600 800 1,000 1,200 1,400 1,600 1,800 O 24,000 O 30,000 O 70,000 90 80 70 60 50 40 30arrow_forwardIndustry Alpha Beta Kappa Delta The table shows market shares of... 1 30 80 25 20 Market Share of Firms in Industry 3 5 20 5 Multiple Choice Alpha 2 30 10 Beta 5 25 20 225 20 4 20 3 25 20 0 1 0 10 The table shows market shares of firms in hypothetical industries. Assume these are distinct industries with no buyer-seller relationships or competition among them. Those who focus on monopoly structure would most likely assert that there is a violation of antitrust law in which industry? 6 OL 0 1 0 10 B for H ✪arrow_forward
- В 10 9 4 - 5 3 12 15 20 22 What is the quantity by shape in a monopoly market? a) 5 B) 15 C) 22 OD) 12 O TO) 20arrow_forwardpenumy.edu LA0 u ten Que Complio St QUESTION 2Y MC 14 13 ATC MR 登 S8R Shce tm the above e is perng monopeicaly competve indutry in the long n we an expect o see Othe lypical fm's econom prolts expand as preduction hecomes more efficient Ohe lypal em praducng theimu po on ATC curve O mar mseterng the ndty un ecunomie profs ah empand share of the tet QUESTION 23 Suppese an indstry has utal sales f 25 millon per y The teo larpest fems have sales of $6 millen each the id largest fem has sales of 2 miion, and the fourth largest f has sales of S1 millon The rm conceation ratio for thin nduty O 30 percent O 1 percent O25 percent O 60 percent QUESTION 24 Suppose there are four frm in an industry The market shares of the four fems are 5 percent, 20 percent 35 percert, and 40 percent The Hurfindahi Hischan index tor that industry O 100 O6 650 O 1.250 O 3250 Chck Sane and Sulmit to ae and aulimit. Click Sate All Anaue to se all aencers Sa Aarrow_forward10. 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…arrow_forward
- 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)arrow_forwardHow would you expect antitrust authorities to react to the following? a. A proposed merger of Ford and General Motors. O They would block this horizontal merger because it violates Section 7 of the Clayton Act. O They would block this horizontal merger because it violates Section 1 of the Sherman Act. O They would allow this horizontal merger unless both firms had very large market shares and the resultant merger would substantially lessen competition. b. Evidence of secret meetings by contractors to rig bids for highway construction projects. O They would allow this. O They would charge these firms with price-fixing, which violates Section 7 of the Clayton Act. O They would charge these firms with price-fixing, which violates Section 1 of the Sherman Act. C. A proposed merger of a large shoe manufacturer and a chain of retail shoe stores. O They would block this merger because it violates Section 7 of the Clayton Act. O They would block this merger because it violates Section 1 of the…arrow_forwardof aboul $92,00 Exhibit 9-4: A Monopoly Total Quantity Total Fixed Variable Price Demanded Cost Cost $100 $20 $0 90 1 $20 20 80 $20 48 70 $20 78 60 4 $20 110 50 $20 150 Refer to Exhibit 9-4. At an output level of 3 units, the monopolist earns a total profits of about O $80.00 $92.00 O $112.00 O$110.00 2. 3. 5.arrow_forward
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