Question 1

Thomas Edison constructed the first building that was used solely to make

Accepted Answer

Thomas Edison constructed the first building solely for the purpose of making movies, known as the Black Maria studio.

Question 2

How does the four-firm concentration ratio differ from the Herfindahl index? Which one does the Justice Department currently rely on when evaluating whether or not a proposed merger should be permitted?

Accepted Answer

The answer of How does the four-firm concentration ratio differ...

Question 3

The capture theory of regulation specifies that

Accepted Answer

The capture theory of regulation suggests that over time, regulatory agencies can become dominated by the very industries they are charged with regulating. This can lead to regulations that serve the interests of the industry rather than the public.

Question 4

What is the difference between a vertical merger and a horizontal merger? Which one is the Justice Department more likely to look at more carefully and why?

Accepted Answer

The answer of What is the difference between a vertical...

Question 5

Network goods such as telephones, computer operating systems and the like, will tend to become monopolies because consumers will naturally tend to buy from the largest supplier of the good. who will eventually become a monopoly. This monopoly position

Accepted Answer

The Sherman Antitrust Act focuses on the conduct of companies, particularly illegal actions taken to establish or maintain a monopoly, rather than the mere existence of a monopoly itself.

Question 6

Exhibit 25-5
​
 
-Refer to Exhibit 25-5. If the natural monopoly firm is guaranteed a normal profit (nothing more and nothing less) then it will produce __________ quantity of output and charge a price of __________ per unit.

Accepted Answer

Without the specific details from "Exhibit 25-5," it's impossible to accurately determine the correct quantity of output and price per unit for a natural monopoly guaranteed a normal profit. The answer would depend on the exhibit's details, such as cost curves, demand curves, and possibly regulatory frameworks, none of which are provided in the question.

Question 7

The capture theory of regulation contends that

Accepted Answer

The capture theory of regulation suggests that over time, regulatory agencies become dominated by the very industries they are supposed to regulate, leading to decisions that favor industry interests over those of the public.

Question 8

Exhibit 25-5
​
 
-Refer to Exhibit 25-5. If the natural monopoly firm were to maximize profits it would produce __________ quantity of output and charge a price of __________ per unit.

Accepted Answer

The answer of Exhibit 25-5
​
 
-Refer to Exhibit 25-5. If...

Question 9

When a new word processing software program is released, companies that might use it must consider not only the cost of buying it, but the costs of retraining all their employees to use it, and of training their support staff to install and operate it. These additional costs beyond the purchase price are known as __________ costs.

Accepted Answer

Switching costs refer to the expenses a company incurs when changing from one product or service to another. In this context, the costs associated with retraining employees and support staff for a new word processing software program are considered switching costs.

Question 10

Define the term lock-in effect and explain how this effect might make a network monopoly that benefits from it less likely to innovate.

Accepted Answer

The answer of Define the term lock-in effect and explain...

Question 11

Exhibit 25-5
​
 
-Refer to Exhibit 25-5. If the natural monopoly firm is regulated to charging a price per unit that achieves resource-allocative efficiency, then it will produce __________ quantity of output and charge a price of __________ per unit.

Accepted Answer

Resource-allocative efficiency occurs where price equals marginal cost. In a natural monopoly, this is typically at a higher quantity and lower price than unregulated monopoly pricing.

Question 12

A network good is one whose value

Accepted Answer

Network goods are those whose value increases as more people use them or as the expected number of units sold increases, due to the network effects.

Question 13

Large firms may be more likely to innovate because

Accepted Answer

The answer of Large firms may be more likely to...

Question 14

If I have the only telephone in town, it is essentially worthless. Then other people in town get telephones and I can call them. The value of my telephone rises as more and more of the town installs phones. This makes the telephone a(n) __________ good.

Accepted Answer

This describes a network good, where the value of the product increases as more people use it or become part of the network.

Question 15

Switching costs make it less likely that the consumer of a network good will shift to a different company's product. This is called the __________ effect.

Accepted Answer

The correct term is the "lock-in" effect, which refers to the situation where a customer is dependent on a vendor for products and services, unable to use another vendor without substantial switching costs.

Question 16

What is the difference between the public interest theory of regulation and the public choice theory of regulation?

Accepted Answer

The answer of What is the difference between the public...

Question 17

Which of the following is an example of a network good?

Accepted Answer

The answer of Which of the following is an example...

Question 18

The existence of switching costs in the use of computer software means that buyers of computer software are __________ likely to change software programs than would be the case in the absence of switching costs, and therefore, the maker of the software program may have __________ reason to innovate.

Accepted Answer

Switching costs make it harder and potentially more expensive for buyers to change software programs, leading to reduced incentives for software makers to innovate since their customers are less likely to switch to competitors.

Quiz 25: Government and Product Markets Antitrust and Regulation

Thomas Edison constructed the first building that was used solely to make

How does the four-firm concentration ratio differ from the Herfindahl index? Which one does the Justice Department currently rely on when evaluating whether or not a proposed merger should be permitted?

The capture theory of regulation specifies that

What is the difference between a vertical merger and a horizontal merger? Which one is the Justice Department more likely to look at more carefully and why?

Network goods such as telephones, computer operating systems and the like, will tend to become monopolies because consumers will naturally tend to buy from the largest supplier of the good. who will eventually become a monopoly. This monopoly position

Exhibit 25-5 -Refer to Exhibit 25-5. If the natural monopoly firm is guaranteed a normal profit (nothing more and nothing less) then it will produce quantity of output and charge a price of per unit.

The capture theory of regulation contends that

Exhibit 25-5 -Refer to Exhibit 25-5. If the natural monopoly firm were to maximize profits it would produce quantity of output and charge a price of per unit.

Define the term lock-in effect and explain how this effect might make a network monopoly that benefits from it less likely to innovate.

Exhibit 25-5 -Refer to Exhibit 25-5. If the natural monopoly firm is regulated to charging a price per unit that achieves resource-allocative efficiency, then it will produce quantity of output and charge a price of per unit.

A network good is one whose value

Large firms may be more likely to innovate because

If I have the only telephone in town, it is essentially worthless. Then other people in town get telephones and I can call them. The value of my telephone rises as more and more of the town installs phones. This makes the telephone a(n) __________ good.

Switching costs make it less likely that the consumer of a network good will shift to a different company's product. This is called the __________ effect.

What is the difference between the public interest theory of regulation and the public choice theory of regulation?

Which of the following is an example of a network good?

The existence of switching costs in the use of computer software means that buyers of computer software are likely to change software programs than would be the case in the absence of switching costs, and therefore, the maker of the software program may have reason to innovate.

Quiz 25: Government and Product Markets Antitrust and Regulation

Thomas Edison constructed the first building that was used solely to make

How does the four-firm concentration ratio differ from the Herfindahl index? Which one does the Justice Department currently rely on when evaluating whether or not a proposed merger should be permitted?

The capture theory of regulation specifies that

What is the difference between a vertical merger and a horizontal merger? Which one is the Justice Department more likely to look at more carefully and why?

Network goods such as telephones, computer operating systems and the like, will tend to become monopolies because consumers will naturally tend to buy from the largest supplier of the good. who will eventually become a monopoly. This monopoly position

Exhibit 25-5 ​ -Refer to Exhibit 25-5. If the natural monopoly firm is guaranteed a normal profit (nothing more and nothing less) then it will produce __________ quantity of output and charge a price of __________ per unit.

The capture theory of regulation contends that

Exhibit 25-5 ​ -Refer to Exhibit 25-5. If the natural monopoly firm were to maximize profits it would produce __________ quantity of output and charge a price of __________ per unit.

Define the term lock-in effect and explain how this effect might make a network monopoly that benefits from it less likely to innovate.

Exhibit 25-5 ​ -Refer to Exhibit 25-5. If the natural monopoly firm is regulated to charging a price per unit that achieves resource-allocative efficiency, then it will produce __________ quantity of output and charge a price of __________ per unit.

A network good is one whose value

Large firms may be more likely to innovate because

If I have the only telephone in town, it is essentially worthless. Then other people in town get telephones and I can call them. The value of my telephone rises as more and more of the town installs phones. This makes the telephone a(n) __________ good.

Switching costs make it less likely that the consumer of a network good will shift to a different company's product. This is called the __________ effect.

What is the difference between the public interest theory of regulation and the public choice theory of regulation?

Which of the following is an example of a network good?

Exhibit 25-5 -Refer to Exhibit 25-5. If the natural monopoly firm is guaranteed a normal profit (nothing more and nothing less) then it will produce quantity of output and charge a price of per unit.

Exhibit 25-5 -Refer to Exhibit 25-5. If the natural monopoly firm were to maximize profits it would produce quantity of output and charge a price of per unit.

Exhibit 25-5 -Refer to Exhibit 25-5. If the natural monopoly firm is regulated to charging a price per unit that achieves resource-allocative efficiency, then it will produce quantity of output and charge a price of per unit.