C. Economies of scale. D. Ownership of essential resources. 4. Many people believe that monopolies charge any price they want to without affecting sales. Instead‚ the output level for a profit-maximizing monopoly is determined by: A. Marginal cost = demand. B. Marginal revenue = demand. C. Average total cost = demand. D. Marginal cost = marginal revenue. 5. Allocative inefficiency due to unregulated monopoly is characterized by the condition: A. P = MC. B. P = MR. C. P > MC. D. P > AVC. 6. If a
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Monopoly 1. Types of market structure 2. The diamond market 3. Monopoly pricing 4. Why do monopolies exist? 5. The social cost of monopoly power 6. Government regulation 7. Price discrimination • We are going to cover sections 10.1-10.4‚ sections 11.1-11.2‚ and for all practical purposes skip chapter 12. • Ben Friedman will speak in class on March 23 on his book The Moral Consequences of Economic Growth 1 3 2 Announcements Types of Market Structure In the real world there is a mind-boggling
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Reportage- Natural Disasters: How do they affect the human beings? It is the 31 December of 2004. We are heading for a new year with new expectations‚opportunities and goals. However we have experienced a Tsunami that just very recently struck Thailand. This has left some traces and marks. How has this natural disaster really affected the human beings? I am about to find out. As I walk the beach of Khao Lake I see destruction so far from the paradise pictures I am used of seeing. It is forenoon
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or commerce among the several States‚ or with foreign nations is declared to be illegal‚” (McConnell‚ Brue‚ & Flynn‚ 2012). This piece of legislation was put into place to prevent extreme concentrations of economic power. It was designed to make monopolies illegal to have which would restrain trade‚ and any conspiracies to restrain trade. If a firm was found guilty for violating the provisions of the Sherman Act‚ a corporation could be dissolved by order of the court‚ fined or imprisonment‚ given
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I do not believe that Amazon is a Monopoly. Yes‚ Amazon is a massive company that continues to grow and become better everyday‚ but it is no where close to even being considered as a monopoly. A Monopoly is a company that usually gives the consumer two choices: to buy the monopolist’s product or to do without. The products sold at Amazon can be bought anywhere. Amazon may claim to have “better prices” and “better quality goods” than other retailers‚ but they only say that so they can get more
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Maximizing Profits in Market Structures Competitive markets‚ monopolies‚ and oligopolies play a big role in the economy. We will be discussing the characteristics‚ price determination‚ output determination‚ barriers to entry‚ and the role in economy of each market structure. In a competitive market there are many firms that supply the same product‚ such as local gas stations. Mankiw (2007) stated‚ “You may recall that a market is competitive if each buyer and seller is small compared to the size
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Important Things To Know * Markup = P-MCP= -1price elasticity of demand * Market demand = firm’s demand for a monopoly ONLY * TR=aQ-bQ2 and MR=a-2bQ * Monopoly output is ALWAYS LESS than competitive output * Colluding leads to the ideal situation (illegal) * MC=WMPL * X=aa+b×MPx or Y=ba+b×MPy * Y = M/Py – (Px/Py)X * Isocost Line: C(Q)=wL+rK | Variation: K=TCr-wrL | Slope: -(w/r) * Isoquant Slope: -(MPL/MPK) | MPLMPK=aKbL=∆K∆L * Optimal cost-minimization:
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2 TYPE: + BUSPROG: Analytic AICPA: BB-Legal 8. A territorial or customer restriction is currently considered a per se violation of antitrust law. answer: F PAGES: Section 2 TYPE: N BUSPROG: Analytic AICPA: BB-Legal 9. The possession of monopoly power is the only element needed to establish the offense of monopolization. ANSWER: F PAGES: Section 3 TYPE: + BUSPROG: Analytic AICPA: BB-Legal 10. A firm may be a monopolist even though it is not the sole seller in a market.
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Chapter 6 After reading this chapter‚ you should be able to: LO6-1 Use elasticity to describe the responsiveness of quantities to changes in price and distinguish five elasticity terms. LO6-2 Explain the importance of substitution in determining elasticity of supply and demand. LO6-3 Relate price elasticity of demand to total revenue. LO6-4 Define and calculate income elasticity and cross-price elasticity of demand. LO6-5 Explain how the concept of elasticity makes supply and demand analysis more
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likely to arrive at the conclusion that under monopoly the industry will produce a lower output at a higher price as compared to perfect competition. This will result in a loss of technical/productive and allocative efficiency. Good candidates might also comment on the loss of consumer welfare and sovereignty. The candidate who‚ in addition‚ comments on the possibility of economies of scale under monopoly would obviously score very highly. Monopoly * only one seller the firm is the industry
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