Ebook Principles of microeconomics (12th edition): Part 2
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Ebook Principles of microeconomics (12th edition): Part 2
www.downloadslide.com PA R'r 111 MARKET IMPERFECTIONS AND THE ROLE OF GOVERNMEN TMonopoly and Antitrust Policy13In 1911 the U.S. Supreme Court found t Ebook Principles of microeconomics (12th edition): Part 2that Standard Oil of New Jersey, the largest oil company in the United States, was a monopoly and ordered that it be divided up. In 1999 a U.S. court similarly found that Microsoft had exercised monopoly power and ordered it to change a series of its business practices. From 2010 to early 201 ? the Ebook Principles of microeconomics (12th edition): Part 2Federal Trade Commission—one of the government agencies empowered to protect consumers—investigated whether Google possessed monopoly power and shouldEbook Principles of microeconomics (12th edition): Part 2
also be restrained by the government in its business practices. What do we mean by a monopoly, and why might the government and the courts try to conwww.downloadslide.com PA R'r 111 MARKET IMPERFECTIONS AND THE ROLE OF GOVERNMEN TMonopoly and Antitrust Policy13In 1911 the U.S. Supreme Court found t Ebook Principles of microeconomics (12th edition): Part 2l the workings and benefits of perfect competition. Market competition among firms producing undifferentiated or homogeneous products limits the choices of firms. Firms decide how much to produce and how to produce. but in setting prices, they look to the market. Moreover, because of entry and compe Ebook Principles of microeconomics (12th edition): Part 2tition. firms do no better than earn the opportunity cost of capital in the long run. For firms such as Google and Microsoft, economic decision makingEbook Principles of microeconomics (12th edition): Part 2
is richer and so is the potential for profit making.In the next three chapters, we explore markets in which competition is limited, either by the fewwww.downloadslide.com PA R'r 111 MARKET IMPERFECTIONS AND THE ROLE OF GOVERNMEN TMonopoly and Antitrust Policy13In 1911 the U.S. Supreme Court found t Ebook Principles of microeconomics (12th edition): Part 2apter 14 will cover oligopolies, and Chapter 15 will deal with monopolistic competition.CHAPTER OUTLINE AND LEARNING OBJECTIVES13.1Imperfect Competition and Market Power: Core Concepts p 2WExplain the fundamentals of imperfect competition and market power.13.2Price and Output Decisions in Pure Monop Ebook Principles of microeconomics (12th edition): Part 2oly Markets/! 299 Discuss revenue and demand in monopolistic markets13.3The Social Costs of Monopoly p309Explain the source of the social costs for aEbook Principles of microeconomics (12th edition): Part 2
monopoly.13.4Price Discrimination p 312 Discuss the conditions under which we find price discrimination and its results.13.5Remedies for Monopoly: Antwww.downloadslide.com PA R'r 111 MARKET IMPERFECTIONS AND THE ROLE OF GOVERNMEN TMonopoly and Antitrust Policy13In 1911 the U.S. Supreme Court found t Ebook Principles of microeconomics (12th edition): Part 2adslide.com298 PART III Market Imperfections and the Role of Government13.1 LEARNING OBJECTIVEExplain the fiindamcntals of imperfect competition and market power.imperfectly competitive industry An industry in which individual firms have some conơol over the price of their output.market power An imp Ebook Principles of microeconomics (12th edition): Part 2erfectly competitive firm’s ability to raise price without losing all of the quantity demanded for Its productpure monopoly An industry with a singleEbook Principles of microeconomics (12th edition): Part 2
firm that produces a product for which there arc no close substitutes and in which significant barriers to entry prevent other firms from entering thewww.downloadslide.com PA R'r 111 MARKET IMPERFECTIONS AND THE ROLE OF GOVERNMEN TMonopoly and Antitrust Policy13In 1911 the U.S. Supreme Court found t Ebook Principles of microeconomics (12th edition): Part 2ge the same price. With many firms producing identical or homogeneous products, consumers have many choices of firms to buy from, and those choices constrain the pricing of individual firms. This same competition also means that firms in the long run earn only a normal return on their capital. In im Ebook Principles of microeconomics (12th edition): Part 2perfectly competitive industries, on the other hand, the absence of numerous competitors or the existence of product differentiation creates situationEbook Principles of microeconomics (12th edition): Part 2
s in which firms can at times raise their prices and not lose all their customers. Firms are no longer price takers, but price makers. These firms canwww.downloadslide.com PA R'r 111 MARKET IMPERFECTIONS AND THE ROLE OF GOVERNMEN TMonopoly and Antitrust Policy13In 1911 the U.S. Supreme Court found t Ebook Principles of microeconomics (12th edition): Part 2oduct and charging different prices for those variants. Studying these markets is especially interesting because we now have to think not only about pricing behavior, but also about how firms choose product quality and type.Forms of Imperfect Competition and Market BoundariesOnce we move away from p Ebook Principles of microeconomics (12th edition): Part 2erfectly competitive markets, with its assumption of many firms and undifferentiated products, there is a range of other possible market structures. AEbook Principles of microeconomics (12th edition): Part 2
t one extreme lies the monopoly. A monopoộ' is an industry with a single firm in which the entry of new firms is blocked. An oligopoly is an industry www.downloadslide.com PA R'r 111 MARKET IMPERFECTIONS AND THE ROLE OF GOVERNMEN TMonopoly and Antitrust Policy13In 1911 the U.S. Supreme Court found t Ebook Principles of microeconomics (12th edition): Part 2s with many producers and free entry arc called monopolisticcompctitors. We begin our discussion in this chapter with monopoly.What do we mean when we say that a monopoly firm is the only firm in tlte industry? In practice, given the prevalence of branding, many firms, especially in the consumer pro Ebook Principles of microeconomics (12th edition): Part 2ducts markets, arc alone in producing a specific product. Procter & Gamble (P&G). for example, is the only producer of Ivory soap. Coca-Cola is rhe onEbook Principles of microeconomics (12th edition): Part 2
ly producer of Coke Classic. And jet we Would call neither firm monopolistic because for both, many other firms produce products that are cluse substiwww.downloadslide.com PA R'r 111 MARKET IMPERFECTIONS AND THE ROLE OF GOVERNMEN TMonopoly and Antitrust Policy13In 1911 the U.S. Supreme Court found t Ebook Principles of microeconomics (12th edition): Part 2tion of a monopolistic industry must be more precise. We define a pure monopoly as an industry (1) with a single firm that produces a product for which there are no close substitutes and (2) in which significant barriers to entry prevent other firms from entering the industry to compete for profits. Ebook Principles of microeconomics (12th edition): Part 2As we think about the issue of product substitutes and market power, it is useful to recall the structure of the competitive market. Consider a firm pEbook Principles of microeconomics (12th edition): Part 2
roducing an undifferentiated brand of hamburger meat. Brand X hamburger. As we show in Figure 13.1. the demand this firm faces is horizontal, perfectlwww.downloadslide.com PA R'r 111 MARKET IMPERFECTIONS AND THE ROLE OF GOVERNMEN TMonopoly and Antitrust Policy13In 1911 the U.S. Supreme Court found t Ebook Principles of microeconomics (12th edition): Part 2some people will continue to consume hamburgers even if they cost more than other foods. As we broaden the category we arc considering, the substitution possibilities outside the category decline, and demand becomes quite inelastic, as for example for food in general. If a firm were the only produce Ebook Principles of microeconomics (12th edition): Part 2r of Brand X hamburger, it would have no market power: If it raised its price, people would just switch to Brand z hamburger. A firm that produced allEbook Principles of microeconomics (12th edition): Part 2
the hamburgers in the United States, on the other hand, might have some market power: It could perhaps charge more than other beef-product producers www.downloadslide.com PA R'r 111 MARKET IMPERFECTIONS AND THE ROLE OF GOVERNMEN TMonopoly and Antitrust Policy13In 1911 the U.S. Supreme Court found t Ebook Principles of microeconomics (12th edition): Part 2cat!In practice, figuring out which products arc close substitutes for one another to determine market power can be difficult. Are hamburgers and hot dogs close substitutes so that a hamburger monopoly would have little power to raise prices? Are debit cards and checks close substitutes for credit c Ebook Principles of microeconomics (12th edition): Part 2ards so that credit card firms have little market power? The courts in a recent antitrust case said no. Is Microsoft a monopoly, or docs it compete wiEbook Principles of microeconomics (12th edition): Part 2
th Linux and Apple for software users? These are questions that occupy considerable time for economists, lawyers, and the antitrust courts.www.downloawww.downloadslide.com PA R'r 111 MARKET IMPERFECTIONS AND THE ROLE OF GOVERNMEN TMonopoly and Antitrust Policy13In 1911 the U.S. Supreme Court found twww.downloadslide.com PA R'r 111 MARKET IMPERFECTIONS AND THE ROLE OF GOVERNMEN TMonopoly and Antitrust Policy13In 1911 the U.S. Supreme Court found tGọi ngay
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