ECON 250D1 Study Guide - Final Guide: Deadweight Loss, Allocative Efficiency, Natural Monopoly
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Econ208: prof. dickinson: conference question sheet 8: chaps 12 & 16. One important factor that the canadian competition bureau must consider when assessing the likely effects of a merger is the definition of the market. How is geography likely to affect the definition of the market for the following products: fresh-baked breads and cakes, cement, gold jewellery, computer hardware. 2; regulatory pricing in a natural monopoly (study guide exercise 12-3) Figure 12-3 shows a market demand curve and a firm"s cost structure. The cost structure is characterized by constant marginal cost (mc), and a large set-up cost so that average total cost (atc) is continuously declining. Why? (b) what are the unregulated monopolist"s profit-maximizing price and quantity in this market, and the associated profit level? (c) what is the resulting deadweight loss? (d) Suppose that a regulatory agency attempted to induce this monopolist to produce the allocatively efficient output by restricting price to equal marginal cost.
