Using the Areeda - Turner test, a competition authority risks making a type II error, that is, not prosecuting predatory pricing when the dominant firm prices above costs. True False
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- Regulation of coal falls solely under provincial jurisdiction because it is a natural resource. Select one: True Falsehe Pear Computer Company just developed a totally revolutionary new personal computer. Pear estimates that it will take competitors at least two years to produce equivalent products. The demand function for the computer is estimated to be P=2,500−500Q�=2,500−500� where Q� is millions of computers. The marginal (and average variable) cost of producing the computer is $900. Assuming Pear acts as a monopolist in its market, the profit-maximizing price and output levels are per computer and million computers, respectively. The total contribution to profits and fixed costs at this output level is million. Pear Computer is considering an alternative pricing strategy of price skimming. It plans to set the following schedule of prices over the coming two years: Complete the following table by calculating the contribution to profit and overhead for each of the 10 time periods and prices. Time Period Price Quantity Sold Total Contribution ($) (Million)…According to the Justice Department guidelines, mergers in an industry are seldom challenged if the industry O has a pre-merger HHI less than 1500 would have a post-merger Herfindahl-Hirschman Index (HHI) less than 1500 has a post-merger HHI of 10,000 would have a post-merger HHI greater than 2500 has a pre-merger HHI of less than 2500
- Consider the following problem.Demand: q = 100-pRetailer: marginal cost of selling r = 10 per unitManufacturer: marginal cost of producing = 40 per unitNeither firm faces any competitor 1. Suppose the manufacturer owns the retailer. Write down the profit function of the vertically-integratedfirm and solve for monopoly price, quantity, and total profit. 2. Suppose now that the retailer and the manufacturer are separate firms. The retailer will buy from themanufacturer at a unit price w (wholesale price). Write down the profit function of the retailer if it buysat w per unit, incurs the marginal cost of selling, and faces the same demand curve as before. Solve forthe optimal price for the retailer and the quantity sold as functions of w.Based on the best available econometric estimates, the market elasticity of demand for your firm's product is -2. The marginal cost of producing the product is constant at $150, while average total cost at current production levels is $225. Determine your optimal per unit price if: a. you are a monopolist b. you compete against one other firm in a Cournot oligopoly c. you compete against 19 other firms in a Cournot oligopolyConsider a monopoly that sells a product to consumers with a constant marginal cost of $13. There are two potential consumers. As a prior belief, each consumer thinks that the product is worth either $29 or $19 with equal probability, and he/she learns the true value of the product after trying it out. Each consumer may have a different perception of the value of the product, and these perceptions are independent events. The product is non-durable. Suppose there are two periods and each consumer demands at most one unit of the product in each period. After the first period, a company named InfoteX could conduct an online marketing survey to learn consumers perceptions of the product. By purchasing the survey from InfoteX, the monopolist knows whether a consumer is happy with the product (i.e., he/she thinks the product is worth $29 instead of $19 after trying it out) or not and can offer personalized prices to customers in the second period. Then the monopolist should charge $_______…
- What is the most controversial aspect of Antitrust regulation? Group of answer choices Defining the allowable size the merged firm should be. Defining a market Sending violators to jail. Agreeing on which concentration measurement to use.In antitrust law, "price-fixing" refers to Multiple Choice O a company paying its suppliers a fixed price for certain inputs. a company fixing the price of its own product regardless of the degree of competition. competitors colluding to set their prices collectively. the government fixing the prices of products of antitrust violators.The industry elasticity of demand for airline travel is −3 and the elasticity of demand for an individual carrier is −4. What is the Rothschild index for this industry?
- Andrew runs a nightclub called “Fun1040". Given the popularity and cache of the club, he has a monopoly position in the market. Males nightclub goers have an individual demand curve of P =16 - q, whereas female customers each have an individual demand curve of P = 22 - q. Andrew has a marginal cost per drink of MC = $2 per unit and no fixed cost. By law, Andrew is unable to charge an entrance fee. He can, however, charge different prices for men and women for their drinks (by serving men blue glasses and women customers their drinks in green glasses). If Andrew tries to maximise profit, which statement is true? O Andrew charges both men and women $12 per drink; this is fırst-degree price discrimination. O Andrew charges men $9 per drink and women $12 per drink; this is an example of third-degree price discrimination. O Andrew charges men $12 per drink and women $9 per drink; this is an example of third-degree price discrimination. O Andrew charges men $10 per drink and women $7 per…Suppose that the Department of Justice (DOJ) vetoes all mergers that are likely to lead to an increase in price of the product. The market demand function is given by P(Q) = 50 – Q. Pre- merger, the market is competitive and the cost function is given by C(Q) = 30Q. Post-merger, the market will be controlled by a monopolist and C(Q) = xQ. For what values of x will the DOJ approve this merger?The Pear Computer Company just developed a totally revolutionary new personal computer. Pear estimates that it will take competitors at least two years to produce equivalent products. The demand function for the computer is estimated to be P=2,500-500Q where QQ is millions of computers. The marginal (and average variable) cost of producing the computer is $900. Assuming Pear acts as a monopolist in its market, the profit-maximizing price and output levels are $ per computer and million computers, respectively. The total contribution to profits and fixed costs at this output level is $ million. Time Period Price Units sold Total Contri. 1 2,400 2 2,200 3 2,000 4 1,800 5 1,700 6 1,600 7 1,500 8 1,400 9 1,300 10 1,200 Over the 10 periods, the total contribution to profits and fixed costs from price skimming is $…