EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Question
Chapter 12.4, Problem 2TTA
To determine
To describe: Evidences to prove tacit collision in antitrust cases are to be enumerated and compared with those of price conspiracy
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Students have asked these similar questions
Suppose that two firms in an industry that has a Herfindahl index of 1,000 announce a merger. The U.S. Justice Department concludes the merger will boost the index to 1,050. The antitrust authorities will most likely
Multiple Choice
allow the merger, but only if foreign entry to the industry is possible.
ignore this merger because of the relatively small size of, and increase in, the Herfindahl index.
prevent the merger.
allow the merger, but strictly regulate the prices set by the new combi
ned firm.
20) If the Herfindahl-Hirschman Index of an industry is less than 1,000, then the Antitrust Division of the
Justice Department
A) will challenge any merger that would increase the index by over 100 points.
B) considers the industry unconcentrated.
C) considers the industry already concentrated.
D) will challenge any merger that raises the index by more than 50 points.
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
Chapter 12 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 12.2 - Prob. 1TTACh. 12.2 - Prob. 2TTACh. 12.2 - Prob. 1MQCh. 12.2 - Prob. 2MQCh. 12.2 - Prob. 1.1TTACh. 12.2 - Prob. 2.1TTACh. 12.2 - Prob. 1.1MQCh. 12.3 - Prob. 1MQCh. 12.3 - Prob. 2MQCh. 12.3 - Prob. 1TTA
Ch. 12.3 - Prob. 2TTACh. 12.3 - Prob. 1.1MQCh. 12.3 - Prob. 2.1MQCh. 12.3 - Prob. 1.1TTACh. 12.3 - Prob. 2.1TTACh. 12.4 - Prob. 1TTACh. 12.4 - Prob. 2TTACh. 12.5 - Prob. 1MQCh. 12.5 - Prob. 2MQCh. 12.5 - Prob. 1TTACh. 12.5 - Prob. 2TTACh. 12.6 - Prob. 1MQCh. 12.6 - Prob. 2MQCh. 12 - Prob. 1RQCh. 12 - Prob. 2RQCh. 12 - Prob. 3RQCh. 12 - Prob. 4RQCh. 12 - Prob. 5RQCh. 12 - Prob. 6RQCh. 12 - Prob. 7RQCh. 12 - Prob. 8RQCh. 12 - Prob. 9RQCh. 12 - Prob. 10RQCh. 12 - Prob. 12.1PCh. 12 - Prob. 12.2PCh. 12 - Prob. 12.3PCh. 12 - Prob. 12.4PCh. 12 - Prob. 12.5PCh. 12 - Prob. 12.6PCh. 12 - Prob. 12.7PCh. 12 - Prob. 12.8PCh. 12 - Prob. 12.9PCh. 12 - Prob. 12.10P
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- A few years ago, US antitrust officials faced the following case. Nestle, producers of Haagen-Dazs wanted to merger with Dreyers, another producer of what is called “superpremium” ice cream. Those opposing the merger pointed about the combined market share of Nestles and Dreyers would be 56% so that along with Unilever, producer of Breyers and Ben&Jerrys, three firms would sell 97% of this half-billion dollar market. Those in favor of the merger countered that the total supermarket ice cream sales are much greater, in excess of $1 billion because consumers can choose non-superpremium ice cream in which Nestle and Dreyer would command only 22% of the market and Unilver an additional 21%. What is the best way to measure the market for ice cream: superpremium or all supermarket ice cream? Should the merger have been allowed?arrow_forwardSuppose that Brooks, Inc. and Spring, Inc. form a joint venture, River Company, whose utility pumps replace the output sold by the parent companies in the domestic market. Assuming that River Company operates as a monopolist and that its costs equal MC0 = AC0, what is: (f) Assume River Company’s formation leads to technological advances that yield cost reductions, such that MC1 = AC1. Compared to the original equilibrium (in (a)), what is the net effect of River Company’s formation on welfare? (Calculate the new total surplus (consumer surplus + producer surplus), and take the difference from your answer to (a).) (g) Assume River Company’s formation leads to wage concessions from River Company employees, such that MC1 = AC1. Compared to the original equilibrium, what is the net effect of River Company’s formation on welfare? (h) Assume River Company’s formation leads to changes in work rules that lead to higher worker productivity, such that MC1 = AC1. Compared to the original…arrow_forwardBased 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 oligopolyarrow_forward
- Why was the Clayton Act of Antitrust passed?a) To replace the Sherman Act of Antitrustb) To replace the Trade Actc) To clarify the Federal Trade Commission Actd) To clarify and elaborate on the Sherman Act of Antitrustarrow_forwardIn 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.arrow_forward16-1. Two equal sized newspaper have an overlap in circulation of 10% (10% of the subscribers subscribe to both newspaper). Advertisers are willing to pay $10 to advertise in one newspaper but only $19 to advertise in both , because they’re are unwilling to pay twice to reach the same subscribers. What’s the likely bargaining negotiation outcome if the advertisers bargain by telling each newspaper that they’re going to reach an agreement with the other newspaper so the gains to reaching agreement are only $9? Suppose the two newspaper merge. What is the likely post merger bargaining outcome?arrow_forward
- In your opinion, what is the best way to deal with the monopoly power problem? Do you advocate antitrust laws or regulations? How might Christian ethics relate to finding solutions to these problems? Initial post should be 200-300 words, not counting citations.arrow_forwardA market has 3 firms. Firm 1 has 37%, firm 2 has 17% and firm 3 has 46% of the total market share. If firm 1 and firm 2 were to merge, calculate the pre- merger and post-merger Hirschmann-Herfindahl Index in the market. If these 3 firms were based in the US, would this merger likely be challenged by the US Department of Justice? If these 3 firms were under the jurisdiction of the European Commission, what criteria could the European Commission use to argue that firm 1 and 2 should not be allowed to merge? 5.arrow_forwardSuppose that two firms produce a particular (homogeneous) product. The inverse demand function for the product is P = 100 -Q. The firms have marginal cost equal to 10. (a) Derive the Cournot Nash equilibrium quantities, and the corresponding price and profits. Show all work. (b) Suppose that the current price is the Cournot price you derived in part (a). Using the hypothetical monopolist test and assuming a 5% threshold for the test, does the good in question represent an antitrust market? Show all work and explain your answer. There are different ways to answer this question and any correct approach will be accepted. (c) Suppose more generally that marginal cost is equal to c. For what values of c will this product represent an antitrust market? Show your work and explain your answer. Maximum size for new files: 400MB Filesarrow_forward
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