Microchapter15 - Rikki Norton Microeconomics Chapter 15...

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Rikki Norton Microeconomics Chapter 15 Questions for Review (1, 3, 7, 8) 1. There are two sets of problems that come to mind when discussing when regulators tell natural monopolies that they must set a price equal to the marginal cost. The first one is that they will increase their costs instead of reducing the amount of output. The second problem is that they monopolies will resist it. 3. The government was given the right to regulate the mergers between companies by the Sherman Anti-Trust Act. A benefit to a company for merging is they would be able to cut their costs however the downside would be the prices would increase due to lack of competition. 7. The deadweight loss would be completely eliminated because all of the surplus would go back to the monopoly producer. 8. A government created monopoly can be a pharmaceutical company; this can be a bad public policy because you cannot receive any medicine that is patented by them for a lower price.
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