PRINCIPLES OF MICROECONOMICS (OER)
2nd Edition
ISBN: 9781947172340
Author: Timothy Taylor, Steven A. Greenlaw
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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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 higher cost structure than country F.
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.
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 MICROECONOMICS (OER)
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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- There are claims saying that free flow of trade prevents monopoly. However, free flow of trade may cause monopoly through predatory pricing. For instance, a foreign industry may dump its goods in a country with free flow of goods strategy. Thus, it forces other rivals out of the market, and will get a monopoly position. Please provide a counter-argument for the above claimarrow_forwardIn 1980, in response to the Soviet invasion of Afghanistan, President Jimmy Carter imposed a grain embargo prohibiting the sale of American grain to the Soviet Union. The Soviets adapted and got grain from elsewhere. The Chinese, in response to Trump’s tariffs, stopped buying U.S. soybeans, getting them instead from Brazil. There is little evidence that such embargoes put any real economic pressure on their targets. When a government embargoes the products of another country what other, potentially unintended and/or negative consequences could you imagine from that act? (100 words maximum)arrow_forwardExamples of this market from uae or Gcc countries : 1- competitive market: 2-monopoly : 3-monopolistic competition : 4-oligopoly:arrow_forward
- Colombia and Brazil are two of the major suppliers of coffee globally, each accounting for the production of roughly 30 percent of all coffee consumed. Suppose that Colombia and Brazil both have the same marginal cost, MCC=20 + 120qc and MCB=20 + 120qB. There are also many smaller coffee producing nations that operate competitively. Suppose that after substracting supply of these smaller nations from global demand, the remaining demand is P= 720-20Q which implies that MR=720-4OQ :Determine the optimal quantity of coffee that Columbia and Brazil should each produce and the global market price they should establish if they collude (you can think of the price being for a 100 kilogram bag of raw coffee beans).arrow_forwardThe diagram below illustrates the change in market equilibrium in the global oil market due to a demand shock, with the demand curve shifting from Demand to Demand'. Supply of oil is provided by OPEC countries, as part of a cartel agreement, and other countries outside the cartel, P. P. Demand Demand Quantity, Q Q Q. Which of the following statements is/are correct? global a) If more countries joined OPEC, and reduced the quantity of oil that they produced as a cartel, it is possible that market oil price could stay the same depending on other market dynamics. b) The price of oil in the global market is fixed by the members of the OPEC cartel. c) If there is increased production of oil in a non-OPEC country when demand is at Demand' there would be a reduction in price from P1, ceteris paribus.arrow_forwarda group of sovereign nations continues to hold the market output at QC. Now suppose scientists discover that the output of this cartel has strong positive externalities for society. Define the term “positive externality.” Explain the impact of this positive externality on the market P and Q. Graphically, what is the Socially Optimal amount of Q? (Use QSOC to indicate this quantity). Explain how you arrived at this output and compare this output to both perfectly competitive market output Q0 and the cartel output QC. Graphically indicate the size of deadweight loss (if there is any DWL), comparing the cartel-determined level of output and the socially optimal output that takes into account positive externalities.arrow_forward
- 1. Which of the following companies most closely resembles a monopoly? Walmart Microsoft Starbucks McDonald's Question Source: Chiang 4e - Economics Princip 39 36 近arrow_forwardSome economies are less healthy than they could be because both the market power and economic profit of some favored firms are protected by either government or some private force (e.g. mafia). Present a firm that has market power and is earning economic profit when it is maximizing profit. Explain how competition could help consumers by showing how the profit maximizing point for this firm might change, to the advantage of consumers, if competitors entered this market and competed against this firm.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
- Many European governments are reluctant to allow online betting in an attempt to protect their national gambling businesses. A recent study found that seven countries out of the 27 in the European Union banned online gambling. Of the other 20 only 13 have opened their markets to competition; in the rest gambling is dominated by monopolies owned or licensed by the government. In the Netherlands, for example, residents can only place online bets with a state monopoly: De Lotto. The Ministry of Justice even warned banks in the country that they could be prosecuted if they transferred money to online gambling companies. Other countries have ordered online betting companies to block access to their sites. Their governments argue that this is to protect people from gambling excessively. However the revenue they gain from their own monopolies should not be ignored as a possible motive. Questions If governments believe that gambling is bad for their citizens then in economic terms how would…arrow_forwardSuppose a local cable company provides cable service to a rural community. The figure to the right illustrates the cable company's marginal cost of providing cable service along with the community's demand for cable TV. Assume the local cable company is a monopoly. When the company maximizes profits, consumer surplus equals $ (enter a numeric response using a real number rounded to one decimal place), and producer surplus equals $ Compared to the perfectly competitive market outcome, the cable company creates dead weight loss equal to $ Price and cost (dollars per cable subscription) 120- 110- 100- 90- 80- 70- 60- 50- 40- 30- 20- 10- to 10 20 MR D 30 40 50 60 70 80 Quantity of cable subscriptions MC 90 100 ONarrow_forwardGive a discussion from the economies of scale perspective on the statement “trade need not be the result of comparative advantage”. And derive the relationship between the number of firms (n) and the price each firm charges (P) for the model of monopolistic competition. [Hint: P = c + 1/ (b * n); c is the marginal cost; b is a positive constant term representing the responsiveness of a firm’s sales to its prices]arrow_forward
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