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16 Cards in this Set
- Front
- Back
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What is regulation?
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Regulation are government rules or incentives designed to control price, sale and production decisions.
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Why regulate?
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Regulation protects public interests. It prevents power abuses by firms with large market shares.
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What is an economy of scope?
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When a number of different products can be produced more efficiently together than apart.
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What is an economy of scale?
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a reduction in unit cost achieved by increasing the amount of production
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When the government imposes public utility regulation what is the best price?
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Demand=Average cost (345, 346)
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Why are imperfect competitors inefficient?
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They set prices above marginal cost.
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According to the Schumpeterian Hypothesis where does a huge portion of the technology and innovation in our economy come from?
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Large firms with lots of market power.
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What is the Sherman Act?
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The cornerstone of American antitrust law. Passed in 1890. (351)
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What is the Clayton Antitrust Act?
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A law passed in 1914. Outlaws price discrimination and some kinds of mergers among other things.
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What is the federal trade commission act?
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Passed in 1914, declares unfair methods of competition, and deceptive acts or practices illegal (352).
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What is predatory pricing?
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A firm sells a good for less than its production costs in order to drive other firms out of business.
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What are tying contacts?
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When a firm will only sell product A to a buyer if they also buy product B.
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What is price discrimination?
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When a firm sells the same product to different consumers at different prices.
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What is a horizontal merger?
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when companies in the same industry combine?
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What is a vertical merger?
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When two firms at different stages of the production process merge.
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What is a conglomerate merger?
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When firms in completely different industries combine.
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