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ECON 203 Homework 5 With Explained Answers 100% Correct Download To Score A
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The information below set s out the estimated market shares for the cellular phone manufacturing market. Firm Market Share Nokia 36% Fujitsu 3% Kyocera 3% LG 6% Motorola 16% Samsung 6% Sanyo 4% Siemens 7% Sony Ericsson 11% Plus 8 more firms with 1% each Based on this information, the Herfindahl-Hirschman Index is 1836 Mary competes in a monopolistically competitive market. Suddenly, 5 new firms enter the market, causing her perceived demand curve to shift. The following tables show her original and new demand curves and her cost information. decrease by 10 The concept of restrictive practices in the U.S. market economy is continually evolving Following the commencement of deregulation of the U.S. airline industry in the 1970s, reduced airfares saved consumers billions of dollars a year, however, the more recent string of airline mergers has: raised new concerns over how competition in the industry can once again be strengthened Prior to the onset of deregulation in the US during the 1970s, it was common for measurements of concentration ratios and HHIs to stop at national borders
Which of the following would be classified as a differentiated product produced by a monopolistic competitor? Channel No. 5 A refers to a group of firms colluding with one another to produce at the monopoly output and sell at the monopoly price. Cartel Monopolistic competitors in the food industry, acting in their own self-interest, will often include a recyclable symbol on packaging used for their product as a means to: Which of the following typically leads to two formerly separate firms being under common ownership? mergers and acquisitions The main challenge for antitrust regulators is
to determine when a merger may hinder competition. If the largest four firms in an industry control less than half the market, their competitive concentration ratio would not be considered particularly high If one firm operating in an oligopoly raises its price and other firms do not do so, the sales of the firm that increased its price will decline sharply. How can parties who find themselves in a prisoner's dilemma situation avoid the undesired outcome and cooperate with each other? find effective ways to penalize firms who do not cooperate A monopolistically competitive firm may earn abnormally high profits in the short term, but the process of entry will drive those profits to zero in the long run. If the firm is producing at a quantity of output where marginal revenue exceeds marginal cost, then . the firm should keep expanding production A monopolistic competitor has the following information about cost and demand. What will this firm's profits equal in the short run? 102 City Gas is a natural monopoly that supplies natural gas to a particular city. Its cost and demand information are given below. The marginal cost of going from a production of 4 million therms to a production of 5 million therms is 20 Million If a monopoly or a monopolistic competitor raises their prices, then decline in quantity demanded will be larger for the monopolistic competitor. Would raising the price for a product create a larger decline in quantity demanded for a
monopolistic competitor's than it would for a monopoly? yes; consumers will buy from competitors offering lower priced substitutes
. If a monopoly or a monopolistic competitor raises their prices, the quantity demanded Will decline The term "tie-in sales" is synonymous with Bundling City Gas is a natural monopoly that supplies natural gas to a particular city. Its cost and demand informati on are given above. An unregulated monopoly will produce million therms of natural gas and sell each therm for 3, $
When the regulator sets a price that a firm cannot exceed over the next few years, the regulator is enforcing price cap regulation The term refers to a situation where the firms supposedly being regulated end up playing a large role in setting the regulations that they will follow regulatory capture If each of two competing monopolists undertakes equal advertising efforts to attract consumers away from the other, the total result is they will simply neutralize one another's efforts A monopolistically competitive industry does not display productive and allocative efficiency in either the short run, when firms are making economic profits and losses, nor in the long run, when firms are earning zero profits. In a monopolistically competitive market, the rule for maximizing profit is to set MR = MC, which means price is higher than marginal revenue A successful advertising campaign may allow competing monopolists to Do all the above Narrowly defined market will tend to make concentration appear higher, while a broadly defined market will tend to make it appear smaller In the US, which of the following has likely been the most influential with respect to the increased level of competition faced by many local retail businesses? globalization and all of the above The implicit assumption that competitive conditions across industries are similar enough to make a decision about the effects of a merger is
a weakness of the concentration ratio analysis method. The shape of the perceived demand curve for a perfectly competitive firm reflects that firm's ability to sell any quantity it wishes at the prevailing market prices If perfectly competitive raises its price, quantity of demand of product ... Falls to zero The demand curve as perceived by a perfectly competitive firm is Flat In the framework of an oligopoly, what strategy can work like a silent form of cooperation?
always match other cartel firms' price cuts, but don't match price increases the single most common form of competition in the u.s. is monopolistic competition among firms with different products Which of the following best identifies what the concept of differentiated products is closely related to? the degree of product variety that is available. Perfect competition and monopoly stand at of the spectrum of competition. opposite ends What role can advertising play with respect to differentiated products? shapes consumers intangible preferences The following table shows the demand curve and cost information for a firm that is a monopoly.a) Price Quantity TC $10 0 $ $9 200 $1, $8 400 $1, $7 600 $2, $6 800 $4, 600 unitsd) The first step to be undertaken by a profit-maximizing monopolistic competitor wanting to decide what price to charge is to select the profit maximizing quantity to produce Which of the following represents a difference in the process by which a monopolistic competitor and a monopolist make their respective decisions about quantity and price? a monopolist need not fear entry and also selection b above The Herfindahl-hirschman index is calculated by taking , squaring it, and adding them up to get a total market share of each firm in the industry
Practices that reduce competition without actual documented agreements between firms to raise price are commonly referred to as D. restrictive practices An agreement between a manufacturer and a distributor stipulating that a dealer will only distribute that manufacturer's products would be classified as a form of exclusive dealing. a monopolistic competitor has the following information about cost and demand what will the firms profits equal in the long run'
What was created by the U.S. government in 1914 to specifically define what types of competition were legally unfair? Federal Trade Commission Since the Margaret Thatcher era of the 1970s, many countries have sold off vast numbers of government- owned firms to private ownership Government passed the to limit the power of large, consolidated firms that were run by trustees as if they were a single firm. Sherman Act in 1890 The information below sets out the estimated market shares for the cellular phone manufacturing market. Firm Market Share Nokia 36% Fujitsu 3% Kyocera 3% LG 6% Motorola 16% Samsung 6% Sanyo 4% Siemens 7% Sony Ericsson 11% Plus 8 more firms with 1% each Based on this information, the four-firm concentration ratio is 70 In the U.S., about of all reported merger and acquisition transactions in 2012 exceeded $500 million, while about exceeded $1 billion. 25%; 11%
In the closing decades of the nineteenth century, many industries in the U.S. economy were dominated by a single firm that had most of the sales for the entire country. In many cases these large firms were organized in the legal form of a trust Antitrust laws were created to give government the power to block certain mergers and break up large firms into smaller ones. If a perfectly competitive firm raises its price, the quantity demanded of its product Falls to zero In the framework of monopolistic competition, advertising works because it causes a steeper perceived demand curve, as well as perceived demand curve to shift to the right.
Perfect competition displays because the social benefits of additional production, as measured by the price that people are willing to pay, are in balance with the to society of that production. allocative efficiency; marginal costs The desire of businesses to , so that they can raise the prices that they charge and earn higher profits, has been well-understood by economists for a long time. avoid competing with each other There have been two especially important shifts in how markets are defined in recent decades: one involves and the other involves technology, globalization. If the U.S. electricity and the telecommunications industry are deregulated, the challenge that will need to be met will involve combining competition where possible with regulation where necessary Splitting up a the natural monopoly held by a public utility that produces and provides electricity would raise the average cost of production and force consumers to pay more. As the name monopolistic competition implies, a firm's decisions in this setting will in certain ways resemble and in other ways resemble monopoly; perfect competition occurs when circumstances have allowed several large firms to have all or most of the sales in an industry. An oligopoly Through the process of exit, in the long run, monopolistically competitive firms remaining in the market are no longer earning losses-they are earning zero economic profit Through the process of exit, monopolistically competitive firms remaining in the market are no longer earning losses The four-firm measures the percentage share of the total sales in the industry
that is accounted for by the largest four firms. concentration ratio The term refers to the percentage share of a firm's total sales in the market. Market share A minimum resale price maintenance agreement requires a dealer who buys from a manufacturer to sell for at least a certain minimum price
The term is used to described circumstances where government takes over ownership of a business Nationalization Monopolistic competitors in the food industry will often include a recyclable symbol on packaging used for their product as a means to differentiate their product The perceived demand for a monopolistic competitor takes competitors into account When P > MC in a monopolistically competitive market, that industry will most likely produce than would be found in a perfectly competitive industry Benefits to society of providing additional quantity as measured by the price that people are willing to pay exceeds the marginal costs to society of producing those units a lower quantity of a good and charge a higher price
Question 5 1 / 1 point The shape of the perceived demand curve for a perfectly competitive firm reflects that firm's ability to a) raise its price without losing all of its customers. b) sell any quantity it wishes at the prevailing market price. c) choose any combination of price and quantity. d) lose fewer customers than a monopoly that raised its prices. Question 6 1 / 1 point If a monopoly or a monopolistic competitor raises their prices, then a) the quantity demanded for the monopoly product falls to zero. b) decline in quantity demanded will be larger for the monopolistic competitor. c) decline in quantity demanded will be larger for the monopoly. d) the quantity demanded for the monopolistic competitor will fall to zero. Chapter 10 costs
a) short term, but the process of entry will drive those profits to zero in the long run. b) short run, but after entry occurs, the long term perceived demand curve shifts to the right. c) long term, but the process of entry will drive those profits to zero in the short run. d) long run, but after entry occurs, the short term perceived demand curve shifts to the right.
Question 7 1 / 1 point A monopolistically competitive firm may earn abnormally high profits in the
Question 8 1 / 1 point The first step to be undertaken by a profit-maximizing monopolistic competitor wanting to decide what price to charge is to a) select the profit maximizing quantity to produce b) determine total revenue, total cost, and profit c) determine average costs, total revenue, and profit d) determine what price to charge for the product Chapter 10 the social benefits Question 9 1 / 1 point In the framework of monopolistic competition, advertising works because it causes a) the steeper perceived demand curve to become flatter. b) perceived demand curve to shift to the left. c) perceived demand curve to shift to the right. d) a steeper perceived demand curve, as well as c above.
a) economic efficiency; total revenues b) allocative efficiency; total costs c) economic efficiency; marginal revenues d) allocative efficiency; marginal costs
Question 10 1 / 1 point Perfect competition displays because the social benefits of additional production, as measured by the price that people are willing to pay, are in balance with the to society of that production.
Chapter 10 prisoner's dilemma situation Question 11 1 / 1 point In the framework of an oligopoly, what strategy can work like a silent form of cooperation? a) immediately match price increases b) always match other cartel firms' price increases, but don’t match price cuts c) always match other cartel firms' price cuts, but don’t match price increases d) legally enforceable agreements Question 12 1 / 1 point If one firm operating in an oligopoly raises its price and other firms do not do so, a) the firm with the increased price will have its higher profits sustained through cooperation. b) the sales of the firm that increased its price will decline sharply. c) the sales of the firm with the higher price will decline slightly. d) the egos of all the top executives will eventually lead to cooperation at that higher
price. Chapter 10 Problems maximize profits Question 13 1 / 1 point Mary competes in a monopolistically competitive market. Suddenly, 5 new firms enter the market, causing her perceived demand curve to shift. The following tables show her original and new demand curves and her cost information. Assume that Mary can only choose from the quantities of output given in the table. By how much will the quantity that she produces change after the new firms enter the market? Original Demand Curve Price Quantity TC 30 0 $
New Demand Curve Price Quantity TC 25 0 $ 20 10 $ 15 20 $ 10 30 $ 5 40 $ a) increase by 10 b) decrease by 10 c) increase by 5 d) decrease by 5 Chapter 10 Problems_ firm's profits Question 14 1 / 1 point A monopolistic competitor has the following information on cost and demand.
Quantity Price ($) Total Revenu e ($) Margin al Revenu e ($) Total Cost ($) Margina l Cost ($) Averag e Cost($) 0 25 0 25 30 — — 2 24 48 23 35 2.5 17.5 4 23 92 21 45 5 11.25 6 22 132 19 60 7.5 10
What will the firm’s profits equal in the long run? a) $102 b) $0 c) $228 d) $91 Chapter 11_monopoly_antitrust_policy Question 15 1 / 1 point The Herfindahl-hirschman index is calculated by taking , squaring it, and adding them up to get a total.
a) market share of each firm in the industry b) total revenues of each firm in the industry market capitalization of each firm in the industry c) d) concentration ratio of each firm in the industry Question 16 1 / 1 point A business occurs when, for practical purposes, one firm purchases another.
a) acquisition b) loss c) merger d) antitrust violation Question 17 1 / 1 point Practices that reduce competition without actual documented agreements between firms to raise price are commonly referred to as. a) competitive practices b) legal practices c) restrictive practices d) regulated practices Chapter 11 antitrust law
Question 18 1 / 1 point In the closing decades of the nineteenth century, many industries in the U.S. economy were dominated by a single firm that had most of the sales for the entire country. In many cases these large firms were . a) as efficient and innovative as they could be b) organized in the legal form of a trust c) using illegal practices to dominate the US economy d) able to provide consumers with the lowest price products Question 19 1 / 1 point What is the maximum value that can be reached using the HHI?