Outline the purpose of antitrust laws. What do they accomplish?
The purpose of antitrust laws is to move markets toward a competitive equilibrium outcome. These laws are used to prevent behavior that would lead to excessive market power by any single firm.
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The following are the equations for the supply and demand curves in the market for weezils: Demand: Qd= 20?2P Supply: Qs= 5 + 3P where Qdis the quantity demanded, Qsis the quantity supplied, and P is the price per weezil in dollars. Refer to Exhibit 4-1. According to the data given, when the market is in Equilibrium, how many weezils are sold?
A. 3 B. 5 C. 11 D. 14
What is not true if a firm exhibits decreasing average cost as quantity increases?
A. Marginal cost must be below average cost. B. Firms would go bankrupt if all prices were equal to marginal cost. C. More customers can be served at lower average costs per unit. D. This is called diseconomies of scale.
Suppose you can get broadband only from your cable company or your phone company. This market would be described by
A. monopolistic competition. B. monopoly. C. oligopoly. D. perfect competition.
Refer to the diagram. At P 3 , this firm will:
A. produce 14 units and realize an economic profit.
B. produce 62 units and earn only a normal profit.
C. produce 40 units and incur a loss.
D. shut down in the short run.