Problem 1
The United States Postal Services maintains a monopoly on mail delivery in part through its exclusive right to access customer mailboxes. Which barrier to entry best describes this situation-scarce resources, economies of scale, government intervention, or aggressive tactics?
Problem 2
Which (if any) of the following scenarios is the result of a natural monopoly? [LO 14.1] a. Patent holders of genetically modified seeds are permitted to sue farmers who save seeds from one planting season to the next. b. Doctors in the United States are prohibited from practicing without a medical license. c. There is one train operator with service from Baltimore to Philadelphia. d. Coal is used as the primary energy in a country with abundant coal deposits.
Problem 3
Due to arduous certification requirements, Nature's Crunch is currently the only certified organic produce grower in a region that produces lots of nonorganic produce alternatives. From a profit-maximizing perspective, would it be better for Nature's Crunch to lobby the government to relax organic certification requirements or to require grocery stores to clearly label its produce as organic?
Problem 4
Nature's Crunch is currently the only certitied organic produce grower in a region that produces lots of nonorganic produce alternatives. Which of the following scenarios would increase Nature's Crunch's profits? Check all that apply. [LO 14.2] a. A tomato blight affecting chemically treated plants. b. An increase in the cost of chemical pesticides. c. A new report about the environmental dangers of chemically treated plants. d. Income tax cuts for all consumers. e. A new report showing that there is no nutritional difference between organic and non organic produce.
Problem 11
Suppose a monopolist discovers a way to perfectly price discriminate. What is consumer surplus under this scenario? What are the efficiency costs?
Problem 12
Suppose there are three types of consumers who attend concerts at your university's performing arts center: students, staff, and faculty. Each of these groups has a different willingness to pay for tickets; within each group, willingness to pay is identical. There is a fixed cost of \(\$ 1,000\) to put on a concert, but there are essentially no variable costs. [LO 14.6\(]\) For each concert: \- There are 140 students willing to pay \(\$ 20\). \- There are 200 staff members willing to pay \(\$ 35\). \- There are 100 faculty members willing to pay \(\$ 50 .\) a. If the performing arts center can charge only one price, what price should it charge? b. What are profits at this price? c. If the performing arts center can price discriminate and charge two prices, one for students and another for faculty/staff, what are its profits? d. If the performing arts center can perfectly price discriminate and charge students, staff, and faculty three separate prices, what are its profits?
