iscuss the monopoly regulation of, and need for regulation of, energy companies. What are the reasons government is involved? What is regulation trying to achieve and what are the thorny problems involved?

iscuss the monopoly regulation of, and need for regulation of, energy companies. What are the reasons government is involved? What is regulation trying to achieve and what are the thorny problems involved?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Sources of monopoly power Monopolists, unlike competitive firms, have some market power. A monopolist can increase price, within limits, without the quantity demanded falling to zero. The main way it retains its market power is through barriers to entry-that is, other companies cannot enter the market to create competition in that particular industry. Complete the following table by indicating which barrier to entry appropriately explains why a monopoly exists in each scenario. Barriers to Entry Scenario In the public water industry, low average total costs are obtained only through large-scale production. In other words, the initial cost of setting up all the necessary pipes makes it risky and, most likely, unprofitable for competitors to enter the market. The Aluminum Company of America (Alcoa) formerly controlled all U.S. sources of bauxite, a key component in the production of aluminum. Given that Alcoa did not sell bauxite to any other companies, Alcoa was a monopolist in the…
2. The Utilities Regulation & Competition Authority (URCA) is an independent, multi-sector regulator established through the URCA Act, 2009. URCA is further empowered through several core pieces of legislation. The Communications Act 2009, the Utilities Appeal Tribunal (UAT) Act 2009, the Electricity Act 2015 and the Electricity Rate Reduction Bond Act 2015. (urcabahamas.bs) a. In detail, explain why BPL is considered a natural monopoly and how URCA may establish a market price paid by the consumer. A diagram/s is required to complete your response
1. Sources of monopoly power A monopolist, unlike a competitive firm, has some market power. It can raise its price, within limits, without the quantity demanded falling to zero. The main way it retains its market power is through barriers to entry-that is, other companies cannot enter the market to create competition in that particular industry. Complete the following table by indicating which barrier to entry appropriately explains why a monopoly exists in each scenario. Barriers to Entry Exclusive Ownership of a Key Government- Created Economies Scenario Monopolies of Scale Resource In the natural gas industry, low average total costs are obtained only through large-scale production. In other words, the initial cost of setting up all the necessary pipes and hoses makes it risky and, most likely, unprofitable for competitors to enter the market. In an imaginary country, there is only one federally licensed lottery agency in any state; that is, it is impossible for any private firm to…
1. Sources of monopoly power A monopolist, unlike a competitive firm, has some market power. It can raise its price, within limits, without the quantity demanded falling to zero. The main way it retains its market power is through barriers to entry-that is, other companies cannot enter the market to create competition in that particular industry. Complete the following table by indicating which barrier to entry appropriately explains why a monopoly exists in each scenario. Barriers to Entry Exclusive Ownership of a Key Government- Created Economies Scenario Resource Monopolies of Scale Patents are granted to inventors of a product or process for a certain number of years. The reason for this is to encourage innovation in the economy. Without the existence of patents, it is argued, research and development for improved electronics is unlikely to take place, since there's nothing preventing another firm from stealing the idea, copying the product, and producing it without incurring the…
10 If the government determines that a natural monopoly must set a price equal to its average cost plus 10%, this is an example of Question 22 options: Cost-plus regulation Price cap regulation Restrictive prices Antitrust law
1.Some monopolies are regulated by setting a price that a monopolist cannot exceed over a specified period of time. This is called: A)price cap regulation B)regulatory capture C)antitrust laws D) cost-plus regulation 2.Let's say that the equilibrium salary for professors is $70,000/year. If universities pay an average of $90,000/year, we can expect a ___________ of professors. A)shortage B)surplus C)monopoly D)union 3.If college education becomes a requirement for working in a fast-food establishment, we may experience a _____________ in the supply of potential fast-food workers. A)increase B)rightward shift C)decrease D)surge 4.Minimum wage laws are examples of price floors, where an employer is: A)Not allowed to pay wages higher that what is set by the law B)Should pay all workers the minimum wage set by the law C)Not allowed to pay wages lower than what is set by the law D)Not allowed to hire people who asks for wages higher than what is set by the…
4. Professor Afano has a monopoly in the market for Intermediate Micro Il textbooks. The time- discounted value of Professor Afano's future earnings is $10,000. Professor Dinero is considering whether to release a competing book. Suppose that with two books on the market the time- discounted value of each professor's future earnings will be $300. Professor Afano is considering strategies to deter Professor Dinero's entry. The professors know profits that are earned by both players in each of the two scenarios (with and without Dinero's entry) and this is a one-shot game with no counteroffers. Assess the rationality of each strategy. Explain your reasoning. Professor Afano threatens to cut his price and attack the credibility of Professor Dinero's book through targeted social media ads. This would result in Professor Dinero losing $8 and Professor Afano earning a time-discounted profit of $700. a. b. C. d. Professor Afano makes a side-deal with Professor Dinero and pays him $200 to stay…
1. Identify which restrictive practices are described in the following scenarios: A. Exclusive dealings B. Bundling C. Tying sales ? 1. The release of a very popular movie franchise will only take place in Cinemark movies theaters 2. You can buy a XYZ laptop for 500 dollars and a XYZ printer for 250 dollars, but with a special promotion you can buy both for 650 dollars 3. To purchase a textbook, a student is required to purchase a study guide as well Next >
2. A public utilities regulator sets prices equal to average costs. As a result, the regulated natural monopoly will produce ______________. a. the allocatively efficient amount of output.b. less than the allocatively efficient amount of output.c. more than the allocatively efficient amount of output.d. either the allocatively efficient amount of output or more than that amount.e. either the allocatively efficient amount of output or less than that amount.
1-In the table below are the demand and cost data for ECON Drugs, a pure monopolist. Complete the table and columns for total revenue, marginal revenue, and marginal cost. What are the answers to these three questions: (a) At what production output will Econ Drugs produce? (b) What price will ECON Drugs charge? (c) What total profit will the Econ Drugs receive at the profit-maximizing level of output? Quantity Price Total revenue Marginal revenue Total cost Marginal cost 0 $34 $_____ $ 20 1 32 _____ $_____ 36 $_____ 2 30 _____ _____ 46 _____ 3 28 _____ _____ 50 _____ 4 26 _____ _____ 54 _____ 5 24 _____ _____ 56 _____ 6 22 _____ _____ 64 _____ 7 20 _____ _____ 80 _____ 8 18 _____ _____ 100 _____ 9 16 _____ _____ 128 _____ 10 14 _____ _____ 160 ___