Assignment Print View (2) - Copy - Assignment Print View...

Info icon This preview shows pages 1–13. Sign up to view the full content.

View Full Document Right Arrow Icon
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 6
Image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 8
Image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 10
Image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 12
Image of page 13
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Assignment Print View http://ezto.mhhm.mcgraW-hill.com/hm.tpx?todo=printview Score: 395 out of 400 points (98.75%) award: 1 10 out of ' 10 points The antitrust laws are based on the: creative destruction view of competition. e idea that competition leads to greater economic efficiency than does monopoly. view that nonprice competition should be strictly regulated by government. view that all negative externalities should be eliminated by government action. Learning Objective: 18-01 List and explain the core elements of the major antitrust (antimonopoly) laws in the United States. Multiple Choice award: 2 10 out of ' 10 points The Sherman Act: was declared unconstitutional in 1895. provided for government regulation of the railroads. «3 declared monopoly and restraints of trade to be illegal. exempted the railroad and communications industries from the antitrust laws. Learning Objective: 18-01 List and explain the core elements of the major antitrust (antimonopoly) laws in the United States. Multiple Choice award: 3 10 out of ' 10 points The main purpose of the antitrust laws is: to encourage firms to produce where P > MC. the elimination of both negative and positive externalities. 44* to prevent the monopolization of industries. to regulate natural monopolies. Learning Objective: 18-01 List and explain the core elements of the major antitrust (antimonopoly) laws in the United States. Multiple Choice 1 of 13 9/18/2011 9:23 PM Assignment Print View http://eztomhhmmcgraW-hil1.com/hm.tpx?tod0=printview awa rd: 4 10 out of ' 10 points The antitrust laws are enforced by the: Federal Bureau of Investigation. Antimonopoly Court of Appeals. «3 Federal Justice Department and the Federal Trade Commission. Department of Commerce. Learning Objective: 18-01 List and explain the core elements of the major antitrust (antimonopoly) laws in the United States. Multiple Choice awa rd: 5- 10 outof 10 points Suppose a court rules that the ABC Corporation is in violation of the antitrust laws because it produces 70 percent of the output of its industry. This decision is consistent with the: US. Steel case. a Alcoa case. behavioralist approach to antitrust. legal cartel theory of regulation. Learning Objective: 18-02 Describe some of the key issues relating to the interpretation and application of antitrust laws. Multiple Choice award: 6 10 out of ' 10 points The Alcoa case: a supported the structuralist approach to antitrust. struck down the treble damages provision of the antitrust laws. called for Federal regulation of any industry with a four-firm concentration ratio in excess of 50 percent. decision was consistent with a behavioralist approach. Learning Objective: 18-02 Describe some of the key issues relating to the interpretation and application of antitrust laws. Multiple Choice award: 7- 10 outof 10 points In the US. Steel case, the court ruled that: even though a firm's behavior might be legal, the mere possession of monopoly power was in violation of the Sherman Act. only monopolies that unreasonably restrain trade are subject to antitrust action under the Sherman Act. when made by dominant firms, tying contracts are illegal, per se. 2 of 13 9/18/2011 9:23 PM Assignment Print View http://ezto.mhhm.mcgraW-hi11.com/hm.tpx?todo=printview the company violated the Clayton Act and therefore should be dissolved into several competing firms. Learning Objective: 18-02 Describe some of the key issues relating to the interpretation and application of antitrust laws. Multiple Choice awa rd: 8 10 out of ' 10 points The decision in the US. Steel case: a reflected a behavioralist approach to antitrust. reflected a structuralist approach to antitrust. divided US. Steel into a number of smaller companies. ruled that US. Steel had engaged in illegal price fixing. Learning Objective: 18-02 Describe some of the key issues relating to the interpretation and application of antitrust laws. Multiple Choice awa rd: 9 10 out of ' 10 points Structuralists take the position that: the rule of reason is appropriate and desirable in interpreting the Sherman Act. only unreasonable anticompetitive acts should be regarded as violations of the antitrust laws. industries should be judged on the basis of their technological progress and their price-output behavior. a an industry that is highly concentrated will behave monopolistically. Learning Objective: 18-02 Describe some of the key issues relating to the interpretation and application of antitrust laws. Multiple Choice awa rd: 10-100utof 10 points Behavioralists believe that: if four or fewer firms control more than half of the market for a product, then the Sherman Act is being violated. industries should be judged on the basis of their price-output behavior and their technological progressiveness. there is no evidence that any monopolistic industries has abused its market power. all concentrations of economic power are socially undesirable. Learning Objective: 18-02 Describe some of the key issues relating to the interpretation and application of antitrust laws. Multiple Choice 3 of 13 9/18/2011 9:23 PM Assignment Print View http://eztomhhmmcgraW-hil1.com/hm.tpx?todo=printview awa rd: 10 tf 11- 1032.2. Afirm charged with monopolizing a market is less likely to be convicted if: a the court accepts a broad definition of the market. the court accepts a narrow definition of the market. it has gained its monopoly through abusive means. it sells its product to other firms, rather than directly to consumers. Learning Objective: 18-02 Describe some of the key issues relating to the interpretation and application of antitrust laws. Multiple Choice awa rd: 12-100utof 10 points Afirm is likely to be a natural monopoly: when the demand for its product or service is inelastic. if it is producing an inferior good. a if economies of scale are experienced over the full range of output. because government grants it an exclusive franchise. Learning Objective: 18-03 Identify and explain the economic principles Multiple Choice and difficulties relating to the setting of prices (rates) charged by so-called natural monopolies. award: 13-100utof 10 points A major criticism of industrial regulation is that: it has been applied to virtually all major US. corporations in the post-Second World War period. marginal cost pricing has created an underallocation of resources. a by allowing a fair return price, it gives natural monopolists little incentive to contain costs. regulatory commissions have frequently caused natural monopolies to go bankrupt. Learning Objective: 18-03 Identify and explain the economic principles Multiple Choice and difficulties relating to the setting of prices (rates) charged by so-called natural monopolies. award: 14-100utof 10 points Critics of the regulation of natural monopolies contend that: regulation increases the incentive of firms to lower costs. regulated firms may use creative accounting to reduce costs, prices, and profits. 4 of 13 9/18/2011 9:23 PM Assignment Print View http://eztomhhmmcgraW-hil1.com/hm.tpx?todo=printview when rates of return are based on the value of real capital, an uneconomic substitution of labor for capital may occur. a the industry may "capture" or control the regulatory commission. Learning Objective: 18-03 Identify and explain the economic principles Multiple Choice and difficulties relating to the setting of prices (rates) charged by so-called natural monopolies. award: 15- 5outof 10 points Carrot Computers and its competitors purchase touch screens for their handheld computers from several suppliers. The six makers of touch screens have market shares of, respectively, 19 percent, 18 percent, 12 percent, 18 percent, 21 percent, and 12 percent. a. What is the Herfindahl index for the touch screen manufacturing industry? 1,738 . b. By how much would a proposed merger between the two smallest touch screen makers increase the Herfindahl index? & Would the government be likely to challenge that proposed merger? Yes c. If Carrot Computers horizontally merges with its competitor Blueberry handhelds, by how much would the Herfindahl index change for the touch screen industry? 1738 ' Learning Objective: 18-02 Describe some of the key issues relating to Section: Antitrust Policy: Issues and the interpretation and application of Impacts antitrust laws. Worksheet 50f13 The six makers of touch screens have market shares of, respectively, 19 percent, 18 percent, 12 percent, 18 percent, 21 percent, and 12 percent. a. What is the Herfindahl index for the touch screen manufacturing industry?§ 1. 138 b. By howwrnwtighflwould a proposed merger between the two smallest touch screen makers increase the Herfindahl index); 2025 Would the government be likely to challenge that proposed merger? Yes c. If Carrot Computers horizontally merges with its competitgrm/E/ilfltiewberry handhelds, by how much would the Herfindahl index change for the touch screen industry / Explanation: Consider the following example. Consider the following example. Carrot Computers and its competitors purchase touch screens for their handheld computers from several suppliers. The six makers of touch screens have market shares of, respectively, 19 percent, 18 percent, 14 percent, 16 percent, 20 percent, and 13 percent. a. The Herfindahl index for an industry is found by squaring the market share of each firm in the industry and adding these together. 3 The Herfindahl index for the firms above equals 1706 (= 192 + 182 + 142 + 162 + 202 + 132). 9/18/2011 9:23 PM Assignment Print View http://eztomhhmmcgraW-hil1.com/hm.tpx?todo=printview b. The two smallest firms make up 13% and 14%, thus if they merge they will make up 27% of the market. The Herfindahl index after the merger is 2070 (=192 + 182 +162 + 202 +(13 + 14)2) The increase in the Herfindahl index is 364 (= 2070 (after merger) - 1706 (prior to merger» The government would likely challenge this merger because a Herfindahl index above 1800 suggests that the market is too concentrated. c. The answer is zero (no change) because the market shares for the touch screen industry have not changed, therefore the Herfindahl index won’t change for the touch screen industry. award: 16-100utof 10 points Monopolistic competition means: a market situation where competition is based entirely on product differentiation and advertising. a large number of firms producing a standardized or homogeneous product. many firms producing differentiated products. a few firms producing a standardized or homogeneous product. Learning Objective: 11-01 List the Multiple Choice characteristics of monopolistic competition. award: 1 7 10 out of ' 10 points Nonprice competition refers to: competition between products of different industries, for example, competition between aluminum and steel in the manufacture of automobile parts. price increases by a firm that are ignored by its rivals. advertising, product promotion, and changes in the real or perceived characteristics of a product. reductions in production costs that are not reflected in price reductions. Learning Objective: 11-01 List the Multiple Choice characteristics of monopolistic competition. award: 1 8 10 out of ' 10 points Monopolistically competitive and purely competitive industries are similar in that: both are assured of short-run economic profits. both produce differentiated products. the demand curves facing individual firms are perfectly elastic in both industries. 4* there are few, if any, barriers to entry. Learning Objective: 11-01 List the Multiple Choice characteristics of monopolistic 6 of 13 9/18/2011 9:23 PM Assignment Print View http://eztomhhmmcgraW-hi11.com/hm.tpx?todo=printview competition. awa rd: 19-100utof 10 points The larger the number of firms and the smaller the degree of product differentiation the: greater the divergence between the demand and the marginal revenue curves of the monopolistically competitive firm. larger will be the monopolistically competitive firm's fixed costs. less elastic is the monopolistically competitive firm's demand curve. 43* more elastic is the monopolistically competitive firm's demand curve. Learning Objective: 11-01 List the Multiple Choice characteristics of monopolistic competition. award: 2 O 10 out of ' 10 points In the long-run, the price charged by the monopolistically competitive firm attempting to maximize profits: must be less than ATC. must be more than ATC. may be either equal to ATC. less than ATC, or more than ATC. “a will be equal to ATC. Learning Objective: 11-02 Explain Multiple Choice why monopolistic competitors earn only a normal profit in the long run. $19 is; 13 in; d 123:2 mama 25.4: Quantity 7 of 13 9/18/2011 9:23 PM Assignment Print View http://eztomhhmmcgraW-hil1.com/hm.tpx?tod0=printview award: 2 1 10 out of ' 10 points Refer to the above diagram for a monopolistically competitive firm in short-run equilibrium. The profit-maximizing output for this firm will be: 100. a 160. 180. 210. Learning Objective: 11-01 List the Multiple Choice characteristics of monopolistic competition. award: 22 10 out of ' 10 points Refer to the above diagram for a monopolistically competitive firm in short-run equilibrium. This firm will realize an economic: loss of $320. a profit of $480. profit of $280. profit of $600. Learning Objective: 11-01 List the Multiple Choice characteristics of monopolistic competition. award: 2 3 10 out of ' 10 points When a monopolistically competitive firm is in long-run equilibrium: P = MC = ATC. MR = MC and minimum ATC > P. MR > MC and P = minimum ATC. @ MR = MC and P > minimum ATC. Learning Objective: 11-02 Explain Multiple Choice why monopolistic competitors earn only a normal profit in the long run. awa rd: 24 . 10 out of 10 points In long-run equilibrium a monopolistically competitive producer achieves: neither productive efficiency nor allocative efficiency. both productive efficiency and allocative efficiency. productive efficiency, but not allocative efficiency. allocative efficiency, but not productive efficiency. 8 of 13 9/18/2011 9:23 PM Assignment Print View http://ezto.mhhm.mcgraW-hi11.com/hm.tpx?todo=printview Learning Objective: 11-02 Explain Multiple Choice why monopolistic competitors earn only a normal profit in the long run. award: 25- 10 outof 10 points Oligopolistic industries are characterized by: a a few dominant firms and substantial entry barriers. a few dominant firms and no barriers to entry. a large number of firms and low entry barriers. a few dominant firms and low entry barriers. Learning Objective: 11-03 Describe Multiple Ch0|ce the characteristics of oligopoly. awa rd: 26- 10 out of 10 points Mutual interdependence means that each Oligopolistic firm: faces a perfectly elastic demand for its product. % must consider the reactions of its rivals when it determines its price policy. produces a product identical to those of its rivals. produces a product similar but not identical to the products of its rivals. Learning Objective: 11-03 Describe Multiple ChOIce the characteristics of oligopoly. award: 27- 10 outof 10 points Aluminum competes with copper in the market for power transmission lines. This illustrates: mutual interdependence. differentiated oligopoly. a interindustry competition. homogeneous oligopoly. Learning Objective: 11-03 Describe Multiple Chouce the characteristics of oligopoly. award: 28- 10 outof 10 points As a general rule, oligopoly exists when the four-firm concentration ratio: exceeds the Herfindahl index. is less than the Herfindahl index. a is 40 percent or more. 9 of 13 9/18/2011 9:23 PM Assignment Print View http://eztomhhmmcgraW-hill.com/hm.tpx?todo=printview is 15 percent or more. Learning Objective: 11-03 Describe Multlple ChOIce the characteristics of oligopoly. award: 29- 10 out of 10 points As a general rule, oligopoly exists when the four-firm concentration ratio: exceeds the Herfindahl index. is less than the Herfindahl index. a is 40 percent or more. is 15 percent or more. Learning Objective: 11-03 Describe Multiple Chouce the characteristics of oligopoly. award: 30 . 10 out of 10 points Assume six firms comprising an industry have market shares of 30, 30, 10, 10, 10, and 10 percent. The Herfindahl Index for this industry is: 2,000. 1,600. '4? 2,200. 80. Learning Objective: 11-03 Describe Multiple Chouce the characteristics of oligopoly. Beta’s France Pcfiicy High " flipha‘s . Patina Poéicy ’ Low N 10 01°13 9/18/20119z23 PM Assignment Print View http://ezto.mhhm.mcgraW-hil1.com/hm.tpx?tod0=printview awa rd: 31- 100utof 10 points Refer to the above diagram wherein the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. If Beta commits to a high-price policy, Alpha will gain the largest profit by: also adopting a high-price policy. adopting a low-price policy. adopting a low-price policy, but only if Beta agrees to do the same. engaging in non-price competition only. Learning Objective: 11-04 Discuss Multiple Choice how game theory relates to oligopoly. award: 32 10 out of ' 10 points Refer to the above diagram where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. With independent pricing the outcome of this duopoly game will gravitate to cell: A. B. C. a D Learning Objective: 11-04 Discuss Multiple Choice how game theory relates to oligopoly. award: 33 . 10 out of 10 points Refer to the above diagram where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. If Alpha and Beta engage in collusion, the outcome of the game will be at cell: B. C. D. Learning Objective: 11-04 Discuss Multiple Choice how game theory relates to oligopoly. awa rd: 34 . 10 out of 10 points Refer to the above diagram where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. If Alpha and Beta agree to a high-price policy through collusion, the temptation to cheat on that agreement is demonstrated by the fact that: 110f13 9/18/20119z23 PM Assignment Print View http://eztomhhmmcgraW-hill.com/hm.tpx?todo=printview a Beta can increase its profit by lowering its price. Beta can increase its profit by increasing its price still further. Both Alpha and Beta can earn even more profits if both agree to a low-price policy. Alpha can increase its profit by reducing its production costs. Learning Objective: 11-04 Discuss Multiple Choice how game theory relates to oligopoly. award: 3 5 10 out of ' 10 points The kinked-demand curve of an oligopolist is based on the assumption that: *3 competitors will follow a price cut but ignore a price increase. competitors will match both price cuts and price increases. competitors will ignore a price cut but follow a price increase. there is no product differentiation. Learning Objective: 11-05 Relate Multiple Choice why the demand curve of an oligopolist may be kinked. award: 36 . 10 out of 10 points The kinked-demand curve model of oligopoly is useful in explaining: the way that collusion works. why oligopolistic prices and outputs are extremely sensitive to changes in marginal cost. a why oligopolistic prices might change only infrequently. the process by which oligopolists merge with one another. Learning Objective: 11-05 Relate Multiple Choice why the demand curve of an oligopolist may be kinked. award: 37- 10 out of 10 points Oligopolistic firms engage in collusion to: minimize unit costs of production. realize allocative efficiency, that is. the P = MC level of output. 43 earn greater profits. increase production. Learning Objective: 11-06 Compare Multiple Choice the incentives and obstacles to collusion among oligopolists. 12 01°1...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern