Chapter 27: Q.a - For Critical Thinking (page 602)
Who pays for the many hours of work that numerous officials of agencies such as the Consumer Product Safety Commission devote to establishing new regulations?
The government pays for the numerous officials of agencies such as the Consumer Product Safety Commission
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Manufacturing firms based in Columbus, Ohio, and Erie, Pennsylvania, have proposed a merger. If they were to merge, the resulting value of the Herfindahl-Hirschman Index in the nationwide market for the product they produce would rise from 1,400 to 1,800. Under current U.S. antitrust guidelines, would this proposed merger raise concerns for the U.S. Justice Department or Federal Trade Commission?
Recently, a food retailer called Whole Foods sought to purchase Wild Oats, a competitor in the market for organic foods. When the Federal Trade Commission (FTC) sought to block this merger on antitrust grounds, FTC officials argued that such a merger would dramatically increase concentration in the market for "premium organic foods." Whole Foods' counterargument was that it considered itself to be part of the broadly defined supermarket industry that includes retailers such as Albert sons, Kroger, and Safeway. What key issue of antitrust regulation was involved in this dispute? Explain.
A few years ago, the U.S. government created a "Do Not Call Registry" and forbade marketing firms from calling people who placed their names on this list. Today, an increasing number of companies are sending mail solicitations to individuals inviting them to send back an enclosed postcard for more information about the firms' products. What these solicitations fail to mention is that they are worded in such a way that someone who returns the postcard gives up protection from telephone solicitations, even if they are on the government's "Do Not Call Registry." In what type of behavior are these companies engaging? Explain your answer. (Hint: Are these firms meeting the letter of the law but violating its spirit?)
Suppose that in panel (a) of Figure 27-2, the vertical distances to points F and A are per unit and per unit, and Qm is units. To measure the degree of monopoly power, economists often examine the differential between price and marginal cost as a percentage of the price. What would be the value of this measure of monopoly power for the natural monopolist depicted in panel (a) of the figure?
A local cable company, the sole provider of cable television service, is regulated by the municipal government. The owner of the company claims that she is normally opposed to regulation by government, but asserts that regulation is necessary because local residents would not want a large number of different cables crisscrossing the city. Why do you think the owner is defending regulation by the city?
What do you think about this solution?
We value your feedback to improve our textbook solutions.
