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19 Cards in this Set
- Front
- Back
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MARGINAL BENEFIT
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The additional satisfaction that a person receives from consuming and additional unit of a good or service. Ex. assume there is a consumer wishing to purchase an additional burger. If this consumer is willing to pay $10 for that additional burger, than the marginal benefit of consuming that burger is $10.
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Arrows up or down: at a natural monopolist's current level of output, marginal cost exceeds marginal revenue. The firm should _____ its output and _____ its price.
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decreased, increased
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A natural monopoly occurs when the long-run cost curve lies entirely _____ (above/below) the demand curve or the typical firm in a two firm market.
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Below
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The entry of a second firm shifts the demand curve of the original firm to the _____, so that at each price the original firm will sell a(n) _____ quantity.
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left, smaller
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What is trust?
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An arrangement under which the owners of several companies transfer their decision-making power to a small group of trustees.
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The purpose of antitrust policy is to promote _____, which leads to lower prices.
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competition, prices
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There are three types of antitrust policies: 1_______, 2______, 3_____.
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Brake up monopolies, blocking mergers, regulating businesses practices.
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A predatory pricing provides a practical and effective means of getting and keeping a monopoly. (True/False)
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True
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What is a merger?
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A process in which two or more firms combine their operations.
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What is tie-in sales?
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Sales where a condition of the sale is that something else is also bought, as when a customer taking out insurance is forced to take further insurance to cover something else which he or she does not need.
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What is predatory pricing?
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A situation where a firm sells a product at a price below its production cost to drive a rival out of a business and then increases the price.
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ANTITRUST POLCYS OF THE U.S.
The Sherman Act of 1890 |
Made it legal to monopolize a market or to engage in practices that result in a restraint of trade.
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Clayton Act of 1914
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Outlawed specific practices that discourage competition, including tie-in sales contrast, price discrimination for the purpose of reducing competition, and stock-purchase mergers that would substantially reduce competition.
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Federal Trade Commission Act of 194
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Created a mechanism to enforced antitrust laws.
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Robinson-Patman Act of 1936
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Prohibit selling products at "unreasonably low prices" with the intent of reducing competition.
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Celler-Kefauver Act of 1950
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Outlawed asset-purchase mergers that would substantially reduce competition.
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Hart-Scott-Rodino Act of 1980
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Extended antitrust legislation to proprietorships and partnerships.
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DEREGULATION
The deregulation of the airline industry led to _____ prices on average, but _____ prices in the city. |
lower, higher
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There were two sources of pressure to deregulate electricity market: 1 _______. 2 _______.
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Technological innovations, substantial variation in prices
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