Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 9, Problem 27CTQ
For many years, the Justice Department has tried to break up large firms like IBM, Microsoft, and most recently Google, on the grounds that their large market share made them essentially
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Antitrust laws
Cooperation among oligopolies runs counter to the public interest because it leads to underproduction and high prices. In an effort to bring resource allocation closer to the social optimum, public officials attempt to force oligopolies to compete instead of cooperating.
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Suppose that the presidents of two auto manufacturing companies exchange text messages in which they discuss jointly raising prices on their new lines of hybrid SUVs.
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The Celler–Kefauver Act of 1950
The Sherman Antitrust Act of 1890
The Robinson–Patman Act of 1936
As the number of firms in an oligopoly industry decreases, the market moves closer to a __________ market.
Over the last 60 or so years, the percentage of women with paid jobs has increased significantly. Is this increase in female employment associated with an increase in the demand for labor, or is it associated with an increase in the supply of labor?
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Monopolies cause a lot of deadweight losses. Describe way through which policy makers can respond to inefficiencies caused by monopolies in an economy. List potential problems associated with each of these policy response mechanisms and the portfolio of the factors that you have consulted
Chapter 9 Solutions
Principles of Economics 2e
Ch. 9 - Classify the following as a government-enforced...Ch. 9 - Classify the following as a government-enforced...Ch. 9 - Suppose the local electrical utility, a legal...Ch. 9 - If Congress reduced the period of patent...Ch. 9 - Suppose demand for a monopolys product falls 50...Ch. 9 - Imagine a monopolist could charge a different...Ch. 9 - How is monopoly different from perfect...Ch. 9 - What is a barrier to entry? Give some examples.Ch. 9 - What is a natural monopoly?Ch. 9 - What is a legal monopoly?
Ch. 9 - What is predatory pricing?Ch. 9 - How is intellectual property different from other...Ch. 9 - What legal mechanisms protect intellectual...Ch. 9 - In what sense is a natural monopoly natural?Ch. 9 - How is the demand curve perceived by a perfectly...Ch. 9 - How does the demand curve perceived by a...Ch. 9 - Is a monopolist a price taker? Explain briefly.Ch. 9 - What is the usual shape of a total revenue curve...Ch. 9 - What is the usual shape of a marginal revenue cuwe...Ch. 9 - How can a monopolist identify the...Ch. 9 - How can a monopolist identify the...Ch. 9 - When a monopolist identifies its profit-maximizing...Ch. 9 - Is a monopolist allocatively efficient? Why or why...Ch. 9 - How does the quantity produced and price charged...Ch. 9 - ALCOA does not have the monopoly power it once...Ch. 9 - Why are generic pharmaceuticals significantly...Ch. 9 - For many years, the Justice Department has tried...Ch. 9 - Intellectual property laws are intended to promote...Ch. 9 - Imagine that you ale managing a small firm and...Ch. 9 - If a monopoly firm is earning profits, how much...Ch. 9 - Return to Figure 9.2. Suppose P0 is 10 and P1 is...Ch. 9 - Draw the demand curve, marginal revenue, and...Ch. 9 - Draw a monopolists demand curve, marginal revenue,...
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Similar questions
- A profit-maximizing price searcher will expand output as long as marginal revenue either exceeds or is equal to marginal cost, lowering its price or raising its price until the midpoint of their demand curve and highest total revenues are achieved. Why are oligopolies able to earn both short-run economic profits and long-run economic profits, while price taking firms like perfect competitors can only earn short-run economic profits?arrow_forwardFor many years, the Justice Department has tried to break up large firms like IBM,Microsoft, and most recently Google, on the grounds that their large market share madethem essentially monopolies. In a global market, where U.S. firms compete with firms fromother countries, would this policy make the same sense as it might in a purely domesticcontext?arrow_forwardQUESTION 36 In 2018, a few countries want to join together to restrict the oil supply to the world market. Together, these countries' exports of oil account for 80% of the total global trade. What would they be trying to accomplish? They are attempting to form a cartel, increase their joint output, and control a larger percentage of the total global trade. They are attempting to price discriminate between consumers of their exported oil, thereby increasing their share of the global trade and increasing their joint profits. They are attempting to form a cartel, jointly restrict output, and increase the world price of oil. They are attempting to act as a bloc to restrict entry of new producers to the world market, and thereby protect their joint profits.arrow_forward
- The Organization of Petroleum Exporting Countries (OPEC) is an international cartel. If the cartel were to hire a consulting firm to monitor the production rates of member countries, the economic reason for this monitoring would be to Multiple Choice make sure that each member country is producing at an output level at which price equals marginal cost. make sure all the member countries produce at least their quotas so that there will be no oil shortage. detect those member countries that are depressing prices by producing more than their assigned quotas. make sure that the marginal revenue for the last barrel of oil sold by each member country is less than its price.arrow_forwardSuppose, Pfizer Company is the only company allowed by the Sultanate government to sell COVID vaccine in Oman. According to you, what type of market Pfizer Company is having in Oman? a. Monopoly market b. Monopolistic market c. Competitive market d. Oligopoly marketarrow_forwardCompare and contrast Price and Quantity determination in a strategic situation like an oligopoly and that in a purely competitive situation. Give examples for each type of scenarios.arrow_forward
- Which of the following statements is true about Andrew Carnegie, John D. Rockefeller, and Henry Ford? They built monopolies and controlled the prices of certain goods. They invested in small businesses to get started. They used effective strategies to contribute to America’s rapid economic growth. They used the assembly line to make their businesses more efficient.arrow_forwardTwo countries, both having a monopoly on Y, decide to engage in trade. Graphically illustrate and discuss the welfare effects on country H when the monopoly in country H has a relatively higher cost structure than country F.arrow_forwardDear tutor, please solve these True/False Questions. Thank You! Two-part tariffs allow the monopoly firm to capture all of the potential consumer surplus generated by the sale of its product. In a simultaneous game where both players prefer doing the opposite of what the opponent does, a Nash equilibrium does not exist.arrow_forward
- Two countries, both having a monopoly on Y, decide to engage in trade. Graphically illustrate and discuss the welfare effects on country H when the monopoly in country H has a relatively lower cost structure than country F.arrow_forwardA market is initially monopolized by a firm that produces the profit-maximizing quantity QM and charges the corresponding price PM on the demand curve. Seeking to end the firm’s monopoly reign of terror, the government initiates an antitrust case and eventually, through intrepid and relentless lawyering, forces a settlement in which the firm will be broken up into a duopoly (two firms competing in the market). Assume that the duopoly market outcome is closer to, but not quite at, the competitive market equilibrium. Clearly label the monopoly and duopoly outcomes on a supply and demand graph. Clearly state how the settlement affects the equilibrium price and quantity in the market. Also, clearly tabulate ΔCS, ΔPS, and ΔSS using appropriately labeled points on the graph. Is the settlement an actual Pareto improvement over the monopoly result? Is it a potential Pareto improvement? Explain. Label the efficiency gain on the graph. llustrate your answer with a graph and final steparrow_forwardEvaluate the following statements.10. (4) Why would you expect sellers of branded goods with high upfront research and development costs to be more interested in free trade than producers who do not incur any fixed costs? 11. (8) Focus attention on the Ricardian model, the Heckscher-Ohlin model, and the monopolistic competition model if trade. Consider the intra-industry trade index for each model. What value for the index does each models predict? Explain your answer.arrow_forward
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