Question
McDonald’s, Burger King, and Wendy’s all produce hamburgers, among other things. However, if you prefer burgers from McDonald’s, you might consider other burgers an imperfect substitute. With this in mind, how would you expect McDonald’s to set its prices in the short

Question
If a market has few barriers to entry and many firms, how might firms still have positive economic profit? Describe a strategy a firm in this type of market might use to maintain economic profits.

Subject
business-economics

Question
Explain why government is usually more concerned about regulating an oligopoly than a monopolistically competitive market.

Subject
business-economics

Question
The United States Postal Service (USPS) has a government monopoly on home mail delivery, but several private companies, such as FedEx, UPS, and DHL, compete with the USPS for other types of delivery service. Describe the differences in producer and consumer surplus,

Question
a. If this monopolist were regulated, would it prefer average total cost pricing (P = ATC) or efficient pricing?
b. Is this a natural monopoly?

Subject
business-economics

Question
Suppose that your state is considering a law that would force all monopolies to charge no more than their average total costs of production. Explain to your legislator the pros and cons of this approach.

Subject
business-economics

Question
Suppose you are advising a mayoral candidate in your town. The candidate’s platform includes strong opposition to monopoly suppliers because consumer welfare is compromised by monopoly pricing. Present your candidate with an alternative view about why it may make sense to tolerate

Question
Until the 1980s, AT&T held a monopoly over the national market for phone services. Suppose that AT&T argued that it was a natural monopoly, because the fixed cost of creating a nationwide phone network generated huge economies of scale, and that there

Question
Suppose a monopolist has to purchase new equipment and his fixed costs increase. Explain what will happen to the monopolist’s profit-maximizing output quantity and the monopolist’s profits.

Subject
business-economics

Question
Suppose that an inventor discovers a new chemical compound that can change the color of people’s eyes with no negative side effects. Since she holds a patent on this chemical, she has a monopoly over the sale of the new eye-color treatment.