Exam 13: Controlling Market Power: Antitrust and Regulation

One possible benefit from a merger is that the new firm could consolidate production,marketing,and a administrative operations,leading to lower the production average costs.

-Refer to Figure 13.3.What price-output combination would result for the natural monopoly if it was unregulated? What price-output combination would result if the government regulated the natural monopoly using average-cost pricing? How would profit differ in each situation?

A pricing scheme under which a firm decreases its price in order to drive its rival out of business is known as

The Federal Trade Commission blocked the merger between Office Depot and Staples because there was evidence that the merger would increase competition in the office supplies industry.

Which of the following industries is a good example of a natural monopoly?

The Sherman Act

Recall the Application about the 1998 merger between Pennzoil and Quaker State to answer the following question(s). The merger resulted in a company with a market share of 38 percent: 29 percent from Pennzoil and 9 percent from Quaker State. -Recall the Application.What happened to the prices of their products when the merger occurred?

The government's policies regarding anti-competitive actions are called industrial policy.

Define a natural monopoly.

Name three industries in which the government has broken up a monopoly.

Describe the Hart-Scott-Rodino Act.

Which government agency was created in 1914 to enforce antitrust laws?

The Consumer Protection Agency is responsible for initiating actions against individuals or firms suspected of anti-competitive behavior.

Under an average-cost pricing policy,the government picks the price at which the market demand curve intersects the monopolist's long-run average-cost curve.

Recall the Application about the merger of Office Depot and Office Max to answer the following question(s). -Recall the Application.In 2013,________ approved the merger of Office Depot and Office Max.

To maximize profit,a natural monopolist will produce at a point where marginal revenue is equal to marginal cost.

If a natural monopoly is allowed to choose the profit-maximizing price,it will most likely be lower than if it is regulated.

If Xerox requires individuals who purchase their copiers to also purchase Xerox toner fluid,then Xerox is engaging in the practice of predatory pricing.

When Staples and Office Depot attempted to merge in 1997,

Describe the Office Depot/Staples case.