Limiting Market Power: Regulation and Anti-Trust Predatory pricing threatens to keep competitors out of the market. It is a price that is so low that it will be profitable for the firm that adopts it only if a rival is driven out of the market. Debate why predatory pricing is an economic inefficiency in a perfectly competitive

Limiting Market Power: Regulation and Anti-Trust Predatory pricing threatens to keep competitors out of the market. It is a price that is so low that it will be profitable for the firm that adopts it only if a rival is driven out of the market. Debate why predatory pricing is an economic inefficiency in a perfectly competitive

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter9: Monopolistic Competition And Oligoply

Section: Chapter Questions

Problem 3SQ

See similar textbooks

Similar questions

In a perfectly competitive market, one of the following answers is correct with respect to the demand curve for a perfectly competitive firm. Which one? Group of answer choices The perceived demand curve is downward sloping. The perceived demand curve for a perfectly competitive firm and a monopolist look the same. When price increases, quantity demanded from the firm will also decrease. The demand curve is flat. Answer correct and explain within 40 mins will give you positive feedback.
Due to low barriers to entry, monopolistic competitive firms can earn ____________ in the long run. Accounting profit but not economic profit. Economic profit but not accounting profit. Both economic profit and accounting profit. Neither economic profit nor accounting profit.
Due to low barriers to entry, monopolistic competitive firms can earn ____________ in the long run. Question 6 options: Accounting profit but not economic profit. Economic profit but not accounting profit. Both economic profit and accounting profit. Neither economic profit nor accounting profit.
Comparing a perfectly competitive market to a monopoly, which of the following is true? Group of answer choices Price will be higher than marginal cost in the perfectly competitive market but will beequal to marginal cost in the monopoly. Price will be equal to marginal revenue in the perfectly competitive market but will behigher than marginal revenue in the monopoly. at that point on the market demand curve which intersects the marginal cost curve. Price will be higher and quantity will be lower in the perfectly competitive market than inthe monopoly.
The figure shows the market demand curve for penicillin, an antibiotic medicine. Initially, the market was supplied by perfectly competitive firms. Later, the government granted the exclusive right to produce and sell penicillin to one firm. The figure also shows the marginal revenue curve (MR) of the firm once it begins to operate as a monopoly. The marginal cost is constant at $3. irrespective of the market structure. After the market changes from perfect competition to a monopoly.. OA. social surplus decreases OB. consumer surplus increases. OC. deadweight loss decreases OD. the market price decreases -COD- Price/Cost (5) 10 9 10 20 30 MR 40 60 00 Demand 70 BO so Quanety (units)
The characteristics of perfect competition and imperfect competition (monopolistic competition, oligopoly, and monopoly). Barriers to entry don't exist for perfect competition, but barriers to entry exist for imperfect competition. What are the implications of barriers to entry to the firm and competition? What happens to consumer surplus is price is above equilibrium, or in this case above normal profits?
3. How short-run profit or losses induce entry or exit Citrus Scooters is a company that manufactures electric scooters in a monopolistically competitive market. The following graph shows the demand curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC) for Citrus. Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss. PRICE (Dollars per scooter) 500 450 400 350 300 250 200 150 100 50 0 MC 0 50 100 ATC Demand 150 200 250 300 350 400 450 500 QUANTITY (Scooters) MR Monopolistically Competitive Outcome Given the profit-maximizing choice of output and price, Citrus Scooters is earning Profit or Loss sellers in the industry relative to the long-run equilibrium amount. Now consider the long run in which scooter manufacturers are free to…
Differentiated goods are NOT a feature of a: perfectly competitive market. monopolistically competitive market. monopolistic market. perfectly competitive market and monopolistic market.
In the long run equilibrium, which of the following will be correct for both perfectly competitive firms and monopolistically competitive firms? There is no social deadweight loss. Price is equal to average cost. Price is equal to marginal cost. Price is equal to marginal revenue.
Whether in the case of clothes and cars or in the case of universities, producers spend a lot of money establishing their "brand names" because: Group of answer choices Brand names are established by driving out the competition, after which these companies charge monopoly prices. Government legislation raises the prices of brand named items with price controls, and people have no choice but to pay the higher price for brand name products. There are legal requirements for companies with brand names to spend a percentage of their budget on advertising. Brand names carry a reputation of better quality, and consumers will pay a higher price for brand names.
Drug dealers purchase a drug at a constant marginal cost of $40 per unit. The drug is then sold in perfect competition. Suppose that rival gangs seize 50% of the drugs and resell them at the prevailing market price. What would be the effect of these gangs on the equilibrium market price? It would go up by $80 It would go up by $40 It would stay the same It would go down by $20 It would go up by $20
Joyce owns a gas station and monopolizes gas sales along a remote stretch of road. In February, Joyce stayed open even though she earned negative economic profits. Draw a correctly labeled graph for Joyce’s gas station during February and show each of the following. The profit-maximizing output and price, labeled QJ and PJ The average total cost curve, labeled ATC Deadweight loss, completely shaded What must have been true for Joyce to continue operating during the month of February even though she earned negative economic profit? Assume that fixed costs for Joyce’s gas station decrease. Would Joyce’s profit-maximizing quantity increase, decrease, or stay the same in February? Explain. During the month of July, demand increases so that Joyce now earns a positive economic profit. However, she realizes her profits would have been higher if she had reduced the price of gasoline. At the quantity sold in July, was marginal revenue greater than, equal to, or less than…