Question

1. Discuss how monopolies form. Can they charge any price they want for their product? Why or why not?

2. Discuss Anti-Trust Policy in the United States. For many years, the Justice Department has tried to break up large firms like IBM, Microsoft, and most recently Google, on the grounds that their large market share made them essentially monopolies. Should the Anti-Trust laws be applied to Google? Defend your answer.?

3. How might predatory pricing reduce competition, and why might it be difficult to tell when it should be illegal? Use examples to illustrate.

4. Give an example of an industry that is a monopolistically competitive market and discuss why this industry fits this description. Is a monopolistically competitive firm productively efficient? Is it allocatively efficient? Explain?

5. Will the firms in an oligopoly act more like a monopoly or more like competitors? Defend your answer.?

6. Using examples of positive and negative externalities, compare and contrast the difference between private costs and social costs.?

7. What is the difference between poverty and income inequality? What are some reasons why a certain degree of inequality of income would be expected in a market economy?

8. Is a monopolistically competitive firm productively efficient? Is it allocatively efficient? Why or why not?