ECON 180 - Regulation and Antitrust Policy
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Course page:
www.cbpa.drake.edu/econ/boal/180
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I. Multiple choice [3 pts each: 21 pts total]
(1)f. (2)a. (3)b. (4)b. (5)b. (6)a. (7)b.
II. Problems
(1) [Measuring industry concentration: 18 pts]
(2) [Entry barriers and contestable markets: 26 pts]
(3) [Dominant-firm price leadership: 30 pts]
III. Critical thinking [5 pts]
Efficiency requires that all firms have the same marginal cost, and that marginal cost equals consumers' marginal willingness to pay. That is, MCDF = MCCF = P. This occurs when the total quantity of output is 12 million, the dominant firm produces 10 million, and the competitive fringe produces 2 million.
I. Multiple choice [3 pts each: 21 pts total]
(1)e. (2)b. (3)a. (4)a. (5)c. (6)b. (7)c.
II. Problems
(1) [Measuring industry concentration: 18 pts]
(2) [Entry barriers and contestable markets: 26 pts]
(3) [Dominant-firm price leadership: 30 pts]
III. Critical thinking [5 pts]
Efficiency requires that all firms have the same marginal cost, and that marginal cost equals consumers' marginal willingness to pay. That is, MCDF = MCCF = P. This occurs when the total quantity of output is 8 million, the dominant firm produces 6 million, and the competitive fringe produces 2 million.
[end of answer key]