What is meant by the term "exclusive dealing"? Give an example of an exclusive deal. When is it illegal?
What will be an ideal response?
Exclusive dealing is a contract that prevents a firm from selling competing items. For instance, Taco Bell has a contract with Pepsi that only Pepsi products will be sold at Taco Bell. Hence Pepsi has arranged an exclusive deal with Taco Bell. Exclusive deals are illegal under the Clayton Act only if they substantially lessen competition or create a monopoly.
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Refer to the market diagram. Of the surplus that consumers lose because there is a monopoly (and not perfect competition), how much is lost to the monopoly itself?
The following questions refer to the accompanying market diagram. PC and QC are the equilibrium price and quantity if the firm behaves competitively, and PM and QM are the equilibrium price and quantity if the firm is a simple monopoly.
a. Area C + D
b. Area E + H
c. Area A + B
d. Area C + D + E
It is highly unlikely that environmental standards are set at an efficient abatement level because of
a. legislative constraints b. the absence of full information about the MSB and MSC of abatement c. differences in MSB and MSC levels at the regional level d. all of the above
When firms get too big, ___________ set in.
Fill in the blank(s) with the appropriate word(s).
In a monopolistically competitive market there are
A) many firms producing an identical product. B) many firms producing similar but not identical products. C) many firms producing totally different products. D) few firms producing identical products.