Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Question
Chapter 28, Problem 6E
To determine
To explain:
The reason an airline executive would prefer to operate in a regulated environment.
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How would you describe the development of the market regulation and the concept of "fair competition" in the market?
3. There is a famous saying that “the monopolist is the conservationist's friend." Explain why this could
be true (in terms of the extraction of a non-renewable resource)? Use a graph in your explanation.
Could you also answer the following questions too.
If Big Top is regulated to charge a price equal to average total cost, what is the quantity of tickets sold, the price of a ticket, and economic profit?
If Big Top is regulated to produce the efficient output, what is the quantity of tickets sold, what is the price of a ticket, and what would be the consumer surplus?
Draw a graph to illustrate the circus market if regulators set a price cap that enables Big Top to break even. Show the deadweight loss in your graph.
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- Does either the four-firm concentration ratio or the HHI directly measure the amount of competition in an industry? Why or why not?arrow_forwardExplain the economic case for social regulation that is based upon externalities. What is the meaning attached to market failure in this context?arrow_forwardWhen governments deregulate an industry, using economic theory, explain what governments want to achieve in terms of social-well being.arrow_forward
- Classify the following as a government-enforced barrier to entry, a barrier to entry that is not governmentenforced, or a situation that does not involve a barrier to entry. a. A city passes a law on how many licenses it will issue for taxicabs b. A city passes a law that all taxicab drivers must pass a driving safety test and have insurance c. A well-known trademark d. Owning a spring that offers very pure water e. An industry where economies of scale are very large compared to the size of demand in the marketarrow_forwardCh Suppose that there are only three types of fruit sold in the United States. Annual sales are 1,200,000 tons of blueberries, 5,400,000 tons of strawberries, and 12,000,000 tons of bananas. Suppose that of those total amounts, the Sunny Valley Fruit Company sells 1,100,000 tons of blueberries, 900,000 tons of strawberries, and 9,200,000 tons of bananas. Instructions: Round your answers to two decimal places. a. What is Sunny Valley's market share if the relevant market is blueberries? percent If a court applies the "90-60-30 rule" when considering just the blueberry market, would it rule that Sunny Valley is a monopoly? (Click to select) b. What is Sunny Valley's market share if the relevant market is all types of berries? percent Would the court rule Sunny Valley to be a monopolist in that market?arrow_forwardDo you think that electronic cigarettes should be taxed and regulated like conventional cigarettes? Explain.arrow_forward
- What are two examples of barriers to entry?arrow_forwardIf Congress reduced the period of patent protection from 20 years to 10 years, what would likely happen to the amount of private research and development?arrow_forwardWhy does regulatory capture reduce the persuasiveness of the case for regulating industries for the benefit of consumers?arrow_forward
- If you were developing a product (like a web browser) for a market with significant barriers to entry, how would you try to get your product into the market successfully?arrow_forwardWhich of the following is not one of the three basic situations in which regulation is imposed? a. externalities b. natural monopoly c. price fixing d. imperfect informationarrow_forwardWhen there is an excess demand of a product in an unregulated market,the tendency is forarrow_forward
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