Exam 16: Real-World Competition and Technology

Real-world market structures tend to be:

A sizeable proportion of corporate takeovers are financed with so-called junk bonds.Such bonds offer bondholders higher rates of return than most other bonds traded because there are no hard assets as collateral to reduce the risk for bondholders in case of a default.The sellers of the bonds hope to be able to meet their obligations to pay these high rates of return to bondholders through the expected increase in profits of the company(ies)just taken over.How do the monitoring problem and the existence of lazy monopolists contribute to the market for junk bonds?

A firm will spend money on a program to develop or protect its monopoly position until the:

According to Peter Theil's book Zero to One,

Refer to the graph shown. If suppliers can reduce output from M to L, the remaining firms in the market that are still producing L will find that their revenues will rise by:

What is the monitoring problem as it applies to corporate management? What are some potential solutions for this problem?

Demonstrate graphically and explain verbally what is meant by the term X-inefficiency.

Across the United States, fire departments are fighting with private companies over the right to respond to medical emergencies. Each side will fight harder the:

Refer to the following graph. A monopolist's inefficiency per unit of output at the profit-maximizing level of output is limited to cost per unit:

The fact that U.S. managers' salaries are about four times higher than those of comparable managers in Japan, where banks control firms more closely, is probably:

The standard monopoly model eliminates the monitoring problem by assuming that:

What are the implications of the monitoring problem for economic analysis?

Refer to the graphs shown. The maximum profits that a lazy monopolist whose average total costs are given by the ATC (X-inefficient)curve but who still produces the profit-maximizing quantity might earn is best shown by the area:

For years, Amazon.com, which began as an Internet bookseller, had no profits and was incurring annual losses. Still, the stock market valued the company very highly. One reason for this was that investors believed that:

Suppose a lazy monopolist's fixed costs are lower than the fixed costs of an efficient monopolist. In all other respects, the monopolists are the same. Which of the following statements about this monopolist is true?

Suppliers would be less eager to organize to restrict output if they faced a:

The cost of dispensing fluoxetine (the generic for Prozac)is about $5 to $10 per prescription, but the consumer's price at most pharmacies is about $85. This suggests that the market for prescription drugs is:

Network externalities can:

According to the phrase, "competition is for losers," a goal of all firms is to:

Consumers tend to accept the market restrictions imposed by suppliers because: