Microeconomics
Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Chapter 15, Problem 14QE
To determine

The basis of judgment for the standard oil and the ALCOA cases.

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Suppose regulators are deciding how the local electric company is allowed to set prices. Demand for electricity is given by P = 40-Q, where Q is millions of megawatt hours demanded annually. The electric company is allowed to operate as a monopoly. The marginal cost of the company is $2, while the fixed cost is $150 million annually. (a) If the price of the electric company was not regulated, what price would it set? What would be its profits and the deadweight loss? (b) Knowing the fixed cost, demand curve, and marginal cost of the utility, the regulator decides to set a linear price that allows the electric utility to break even. What is this price? What would be the deadweight loss? (c) Suppose that demand for electricity varies over the course of the day and is most inelastic in the middle of the day. Illustrate how the regulator could use this information to improve on the outcome in (b)? Would there be any challenges that would prevent regulators from using the prices you…
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 stream of commerce theory of jurisdiction states that a court will have jurisdiction over a foreign defendant if it places a defective product into the stream of commerce, causes injury, and reaches out to the state's citizens by advertising its products. True False
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