Exam 15: Monopoly and Antitrust Policy

Alphabet, the parent company of Google, announced it has reached an agreement to buy Fitbit in an all-cash deal for $2.1 billion. The acquisition is subject to U.S. Department of Justice (DOJ) approval. The DOJ has expressed concerns regarding the Fitbit user data that Google will have access to if the acquisition is completed, especially data sold to Google without the consent of Fitbit users. The wearable technology industry has also expressed concerns that the merger would create an industry dominated by only two firms, Google and Apple. Source: Gabriela Barkho, "DOJ Probes Google's Fitbit Acquisition Over Consumer Health Data Concerns," observer.com, December 11, 2019. -Refer to the Article Summary. A merger between two competitors such as Google and Fitbit may ultimately be approved by the Department of Justice and the FTC if the two companies can substantiate ________ as a result of the merger.

Figure 15-20 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 15-20. In the absence of any government regulation, the profit-maximizing owners of this firm will produce ________ units and charge a price of ________.

Delaware and North Dakota have identical state gasoline taxes of 23.0 cents per gallon. When added to the federal gasoline tax of 18.4 cents per gallon, the total tax on one gallon of gasoline in these two states is 41.4 cents. On January 30, 2020, the average price of one gallon of regular gasoline was $2.23 in Delaware and $2.43 in North Dakota. Sources: worldpopulationreview.com and gasprices.aaa.com Briefly explain whether this is an example of price discrimination. Assume that the gasoline being sold is identical in both states and there is no cost difference in the gasoline.

Julie plans to start a pet-sitting service. She surveyed her neighborhood to determine the demand for this service. Assume that each person surveyed demands only one hour of pet sitting services per period. Table 15-6 above shows a portion of her survey results. -Refer to Table 15-6. If Julie charges $10 per hour, how many hours of pet sitting services will be purchased and by whom?

Figure 15-19 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-19. If the government regulates Erickson Power Company so that the firm can earn a normal profit, the price would be set at ________ and the output level is ________.

Figure 15-4 shows the demand and cost curves for a monopolist. -Refer to Figure 15-4. What is the amount of the monopoly's total cost of production?

Chantal owns a hairdressing salon which caters to two main groups of customers: residents of "The Chateau," a retirement community, and other residents in the neighborhood. Figure 15-17 shows the demand curves for the residents of the retirement community, labeled Market A, and other residents in the neighborhood, labeled Market B. The demand curves are not identical. -Refer to Figure 15-17. Suppose the salon price discriminates. What prices are charged in the two markets?

Julie plans to start a pet-sitting service. She surveyed her neighborhood to determine the demand for this service. Assume that each person surveyed demands only one hour of pet sitting services per period. Table 15-6 above shows a portion of her survey results. -Refer to Table 15-6. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7 per hour. What is her marginal revenue?

Julie plans to start a pet-sitting service. She surveyed her neighborhood to determine the demand for this service. Assume that each person surveyed demands only one hour of pet sitting services per period. Table 15-6 above shows a portion of her survey results. -Refer to Table 15-6. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7. How many hours will be purchased and what is her total revenue?

Figure 15-19 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-19. The firm would maximize profit by producing

-Refer to Figure 15-18. Graph (a) represents a monopolist who cannot price discriminate and graph (b) represents a monopolist practicing perfect price discrimination. On each graph, identify the monopoly price, the monopoly output, the efficient output, and the areas representing profit, consumer surplus, and deadweight loss.

Plato Playhouse, a theatre company in the university town of Wegg, caters to two groups of customers: students and the non-student population. Figure 15-16 shows the demand curves for the two groups of customers. -Refer to Figure 15-16. Suppose Plato Playhouse price discriminates. What is the quantity sold to each group of customers and what is the total quantity sold?

Figure 15-20 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 15-20. If the regulators of the natural monopoly allow the owners of the firm to break even on their investment the firm will produce an output of ________ and charge a price of ________.

Figure 15-20 shows the market demand and cost curves facing a natural monopoly. -Refer to Figure 15-20. Which of the following would be true if government regulators require the natural monopoly to produce at the economically efficient output level?

Figure 15-19 shows the cost and demand curves for the Erickson Power Company. -Refer to Figure 15-19. Erickson Power is a natural monopoly because

-Refer to Figure 15-15. With perfect price discrimination, the firm will produce and sell

-Refer to Figure 15-15. What is the consumer surplus received under perfect price discrimination?

Neem Products sells its Ayurvedic Neem toothpaste in two completely isolated markets with demand schedules as shown in Table 15-5. The average cost of production is constant at $2 per tube. -Refer to Table 15-5. How many tubes of toothpaste will Neem sell in Middle Fall and at what price?

Plato Playhouse, a theatre company in the university town of Wegg, caters to two groups of customers: students and the non-student population. Figure 15-16 shows the demand curves for the two groups of customers. -Refer to Figure 15-16. Suppose Plato Playhouse price discriminates. Which of the following statements is true?

Neem Products sells its Ayurvedic Neem toothpaste in two completely isolated markets with demand schedules as shown in Table 15-5. The average cost of production is constant at $2 per tube. -Refer to Table 15-5. What are the total profits from both markets combined?