Chapter 14: 22PA (page 523)
Evaluate this statement: "If the U.S. imposed a uniform excise tariff on all foreign imports, all U.S. businesses and workers would benefit. Consequently, if a bill to impose a uniform excise tariff were introduced in the U.S. Congress, it would unanimously pass."
The statement is false.
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Question:12. Between 1972 and 1981 , Texaco sold gasoline to independent Texaco retailers at "retail tank wagon prices" but granted substantial discounts to distributors Gull and Dompier. Gull resold the gas under its own name. Dompier resold the gas under the Texaco brand name to retail stations and entered the retailmarket directly. Since neither Gull nor Dompier had significant storage facilities, both distributors picked up gas directly from the Texaco plant and delivered it to their retail outlets. As a result, the sales volume increased substantially at the retail stations purchasing gas from these distributors, while independent Texaco retailers suffered a corresponding sales decline. In 1976, independent Texaco retailers filed suit against Texaco. In 1990, the Supreme Court of the United States found that Texaco had indeed violated antitrust law. Which law do you think Texaco was found guilty of violating?
Moses Inc. is a small electric company that provides power to customers in a small rural area in the Southwest. The company is currently maximizing its profits by selling electricity to consumers at a price of \(0.15 per kilowatt-hour. Its marginal cost is \)0.05 per kilowatt-hour, and its average cost is \(0.15 per kilowatt hour. A government regulator is considering a proposal to regulate the firm's price at \)0.05 per kilowatt-hour. Would such a policy improve social welfare? Explain.
Question: Section 16(a) of the Securities and Exchange Act of 1934 , as amended in 1990 , requires that the officers, directors, and principal shareholders of companies disclose the extent of their ownership of equity securities of the company and any changes in the ownership. Section 16(b) permits companies to recover trading profits realized by such people arising from short-swing transactions in the company securities. Do you think that, as a result of these laws, the government will be forced to spend more money on its auditing and enforcement efforts? Explain.
Question: You are an industry analyst who specializes in an industry where the market inverse demand is . The external marginal cost of producing the product is , and the internal cost is .
a. What is the socially efficient level of output?
b. Given these costs and market demand, how much output would a competitive industry produce?
c. Given these costs and market demand, how much output would a monopolist produce?
d. Discuss actions the government might take to induce firms in this industry to produce the socially efficient level of output.
Explain, using precise economic terminology, the economic rationale for laws against insider trading.
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