Question.2939 - In the well-known case of United States vs. Microsoft, the US Department of Justice alleged that Microsoft abused "monopoly power" when it bundled its Internet Explorer Browser with its Windows Operating System. Based on your Internet research, write an analysis of 750 words on the merits of the DOJ's antitrust case against Microsoft and the company's defense. Delineate which market participants you believe benefited from the final court decision and whose interests were harmed.In figure 27.2 ( a ) How much profit does an unregulated monopolist earn? ( b ) How much profit would be earned if MC pricing were imposed? 2. Do total profits (A) decrease, (B) increase, or (C) stay the same when new technology reduces average total costs (shifts ATC downward in Figure 27.2) in ( a ) An unregulated natural monopoly? ( b ) A price-regulated natural monopoly? ( c ) A profit-regulated natural monopoly? 3. Suppose a natural monopolist has fixed costs of $24 and a constant marginal cost of $2. The demand for the product is as follows: Price (per unit) $10 $9 $8 $7 $6 $5 $4 $3 $2 $1 Quantity demanded (units per day) 0 2 4 6 8 10 12 14 16 18 Under these conditions, ( a ) What price and quantity will prevail if the monopolist isn’t regulated? ( a1 ) Price ( a2 ) Quantity ( b ) What price–output combination would exist with efficient pricing (MC 5 p )? ( b1 ) Price ( b2 ) Quantity ( c ) What price–output combination would exist with profit regulation ( c1 ) Price (zero economic profits)? ( c2 ) Quantity Illustrate your answers on the following graph: FIGURE 27.2 Natural Monopoly: Price Regulation If unregulated, a natural monopoly will produce qA and charge pA , as determined by the intersection of the marginal cost and marginal revenue curves (point A). Regulation designed to achieve efficient prices will seek point B, where p 5 MC. Still lower average costs (production efficiency) are attainable at higher rates of output (capacity), however. On the other hand, a zero-profit, zero-subsidy outcome exists only at point C. Which price–output combination should be sought? I will email the figure separate.
Answer Below:
Part xxx U x Department xx Justice xx Microsoft xx May xxxxxxxxx Corporation xxxxx antitrust xxxxxxxx by xxx U x Department xx Justice xxx engaging xx anti-competitive xxxxxxxxx practices xxx U x DOJ xxxxxxx Microsoft xxxxxxxxxxx for xxxxxxxx its xxxxxxxx Explorer xx with xxx Window xxxxxxxxx system xx an xxxxxxx to xxxxxx the xxxxxxxxxxx in xxx browser xxxxxx and xxxxxxxxxx achieve x monopoly xxxxxxxx The xxxxxxxxx which xxxxx highlight xxx merits xx the xxx rsquo x antitrust xxxx against xxx Microsoft xxxxxxx around xxx concept xx competitive xxxxxxxxxx consumer xxxxxx and xxxxxxxxxx Microsoft xxx booked xxxxx the xxxxxxx Antitrust xxx on xxx accusation xxxx it xxx established xxxxxx as x monopoly xx the xxxxxxxxx systems xxxxxxx for xxxxxxxx Computers xxx the xxxxxxxxx of xxxx a xxxxxx structure xx prohibited xx the xxxxxxx of xxxxxxxx efficiency xxx social xxxxxxx Further xx was xxxxxxxxx that xxx marketing xxxxxxxx adopted xx Microsoft x integrating xxx Internet xxxxxxxx IE xxxx the xxxxxx Operating xxxxxx - xxxx lead xx the xxxxxxxxxxxxx of xxxxxx power xx the xxxxx of xxx company xxxxxxxxxxx the xxxxxxxxxx power xx the xxxxx competitors xxxxx had xxx potential xx give x neck-to-neck xxxxxxxxxxx to xxxxxxxxx Microsoft xxxx its xxxxxxx IE xx the xxxxxxx Operating xxxxxx free xx cost xxxxxxx creating x predatory xxxxxxx action xxxxxx it xxxxxxxxxx for xxx competitors xxxx prominently xxxxxxxx to xxxxx competing xxxxxxxx in xxx market xxxxxxx this xxxxxxxxx gimmick xxx company xxxxx to xxxxxx an xxxxx barrier xx impede xxx rival xxxxx from xxxxxxxxx Since xxxxxxxx of xxx software xxxxxxx huge xxxxxxxxxx and xxxxx acts xx asymmetric xxxxx to xxx other xxxxxxx It xxx also xxxxxxx that xxxxxxxxx entered xxxx exclusionary xxxxxxxxxx with xxxxxxxx manufactures xxx Internet xxxxxxx Providers xx order xx raise xxx costs xxx Netscape xx making xxx browser xxxxxxxxx to xxxxxxxxx It xxx alleged xxxx such x strategy xx Microsoft xxx driven xx the xxxxxx attempt xx acquire xxx largest xxxxxx share xx the xxxxxxxx software xxxxxxx and xxxxx establish xxx monopoly xx the xxxxxxxx The x S xxx sued xxxxxxxxx on xxx charges xx violating xxx Section xxx Sherman xxxxxxxxx Act xxxxx prohibits xxxxxxxx of xxxxxxxxxx and xxxxxxx in xxxxx to xxxxx the xxxxxxxxx of xxx consumers x monopoly xxxxx is xxxxxxxxxx to xx competitively xxxxxxxxxxx since xx helps xxx monopolist xx exercise xxxxx control xxxxx helps xxx charge x price xxxxxxxxxxxxx in xxxxxx of xxxxxxxxxxx levels xxxxxxx exploiting xxx consumers xxxxxxxx hampers xxxxxxxxxx and xxxxxx the xxxxxxx available xx consumers xxxx happens xxxxxxx there xx little xxxxxxxxx for xxx other xxxxx to xxxxxx compete xxxxxxx a xxxxx corporation xxxx a xxxxxxxxxx market xxxxx Microsoft xxxxx s xxxxxxx against xxx case xxxxx Microsoft xx its xxxxxxx claimed xxxx it xxxxx significant xxxxxx from xxxxx rival xxxxxxxxx in xxx Operating xxxxxxx market xxx did xxx have x monopoly xx the xxxxxxxx Microsoft xxxxxx that xxxxxxxxxxx the xx browser xxxx the xxxxxxx Operating xxxxxx was x move xx complete xxxx its xxxxxx and xxxxxx be xxxxxxxxxx as xxxxxxxxxxxxxxxx Microsoft xxx legally xxxxxxx to xxxxxx and xxx new xxxxxxxx functionality xx its xx browser xxx asserted xxxx the xx functionality xxxxxxxx more xxxxxxx to xxx consumers xx making xxx operating xxxxxx a xxxxx for xxxxx option xx the xxxxxxx lines xxxxxxxxx also xxxxxx that xxxx add-on xxxxxxx was x by-product xx its xxxxxxxxxx efforts xxxxx involved x great xxxx of xxxxxxxxxx in xxxxx of xxxxxxx human xxxxxxxx and xxxxx intellect xxx hence xxxxxx the xxxxxxx rsquo x efforts xx foster xxxxxxxxxx The xxxxxx to xxxxxxx the xx browserwith xxx Windows xxxxxxxxx system xxx to xxxxx the xxxxxxxxx in xxx market xxxxx and xxxxxxxxx convenience xxxxxxxxxx to xxx consumers xxxx a xxxxxxxxxxxxx browser xxxxxxxxx also xxxxxx the xxxxxxxxxxx pertaining xx the xxxxxxxxxxxx agreements xxxx the xxxxx computer xxxxxxxxxxxx and xxxxxxxx Service xxxxxxxxx It xxxxxxx that xxx contracts xxxx not xxxxxx restrictive xxxxxxxx vs xxxxx - xxxxxx the xxxxxxxx of xxx antitrust xxxxxxxxxx on xxxxxxxxx is xxxxx debated xx my xxxx it xxxxxx out xxxx the xxxxx court xxxxxxxxx offered x win-win xxxxxxxxx for xxx the xxxxxx participants xxx decisions xxxxx way xxx enhanced xxxxxxxxxxx in xxx software xxxxxxxx indicated xx the xxxxx of xxx web xxxxxxxx like xxxxxx Chrome xxxxxxx etc xx the xxxxxx Many xxx companies xxxxxxx the xxxxxxxx industry xxxxx after xxx verdict xxxxxxx a xxxxxxxxxx business xxxxxxxxxxx and xxxx helped xxx industry xxxxxxxx in xxx past xxxxxx This xxxx consumers x wide xxxxx of xxxxxxxxxxx to xxxxxx from xx per xxxxx tastes xxx preferences xxx costs xxxx come xxxx dramatically xxxxxxx on xxx benefits xx a xxxxxx segment xxx industry xxx only xxx entry xx new xxxxxx but xx the xxxx time xx influx xx sophisticated xxx suave xxxxxxxxxxxx gizmos xxx tablets xxxxxxxxxx has xxxxxx a xxxxxx weapon xxx competition xx this xxxx pong xxxxxxx among xxx industry xxxxxxx like xxxxxxxxx Google xxxxx IBM xxx for xxxxxxxxx a xxxxxx market xxxxx In xxxxxxxxxx the x S xxxxxxxxxx of xxxxxxx vs xxxxxxxxx case xxx been xxx of xx epic xx today xxxxx s xxxxxx world xx competition xxxxx anti-competitive xxxxxxxx are xxxxxxx through xxxxxxxxx decision xxxxxx rather xxxx conventional xxxxx and xxxxxxx the xxxxxxxxxx of xxxxxxxxx laws xx study xxx potential xxxxxxx to xxxxxxxxxxxxxxx through x different xxxx of xxxxxxxxx behavior xxxxxxxxxx The xxxxxxx Department xxx Absolutely xxxxx to xx After xxxxxxxxx in xxx s xx Matthew xxxxxxxx Published xx August xxxxxxxx at xxxx www xxxxx com xxxxx moneybox xxxxxxxxx antitrust xxxx the xxxxxxxxxxx of xxx justice xxxxxxxxxx html xxxx antitrust xxxx ends xxx Microsoft xx Sharon xxxx Chan xxxxxxxxx in xxx Seattle xxxxx on xxx Accessed xx http xxxxxxxxxxxx com xxxx microsoft xxxxxxxxx html x S xx MICROSOFT xxx Overview x S xxxxx says xxxxxxxxx violated xxxxxxxxx laws xxxx predatory xxxxxxxx By xxxx Brinkley xxxxxxxxx in xxx New xxxx Times xx April xxxxxxxx at xxxx www xxxxxxx com xxxxxxxx us-vs-microsoft-overview-us- xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx html xxxxxxxxxx all xxx amp xxx pm xxxx if xxxxxxxxx loses xxx antitrust xxxx - xxxxxxx Department xxxxxxx considers xxxxxxxxx remedies xx Bob xxxxx Published xx Story xxxx CNN xxx on xxxxxxxx Accessed xx http xxxxxxx cnn xxx TECH xxxxxxxxx whatif xxx A xxxx of xxxxx in xxxxx The xxxxxxxxx Antitrust xxxxxxx Published xx Microsoft xxx Centre xxxxxx on xxx Accessed xx http xxx microsoft xxx en-us xxxx features x trialdoc xxxx The xxxxxxxxx Antitrust xxxx By xxxxxxxx Economides xxxxxxx April xxxxxxxx at xxxx archive xxx edu xxxxxxxxx - xxxxxxx In xxxxxx a xxx much xxxxxx does xx unregulated xxxxxxxxxx earn xxxxxx An xxxxxxxxxxx monopolist xxxx maximize xxx profit xx a xxxxx where xxxxxxxx Revenue xx equals xxxxxxxx Cost xx ndash xxxxxx MAXIMIZATION xxxx At xxx profit xxxxxxxxxxxx point x the xxxxxxxxxx will xxxxxxx qA xxxxx and xxxxxx a xxxxx of xx per xxxx Now xx know xxxx profit xx the xxxxxxxxxx between xxx total xxxxxxx and xxxxx cost xxxx total xxxxxxx earned xx the xxxxxxxxxxx monopolist xxxxxx quantity xxxxxxxx multiplied xx price xx pA xxx total xxxx is xxxxxxxx produced xxxxxxxxxx by xxxx qA xx Therefore xxx profit xxxxxx by xx unregulated xxxxxxxxxx equals xxxxx PROFIT xx pA x qA xx An xxxxxxxxxxx monopolist xxxxxxxxx its xxxxxx level xx qA xxxxx which xx much xxxxx than xxx competitive xx able xx charge x price xx higher xxxx the xxxxxxx Cost xx and xxxxx able xx make xxxxxxxx profits x How xxxx profit xxxxx be xxxxxx if xx pricing xxxx imposed xxxxxx Given xxx MC xxxxxxx rule xxx monopolist xx forced xx charge x price xxxxx to xxx marginal xxxx efficient xxxxxx condition xxx social xxxxxxx which xx the xxxxx B xx the xxxxxx At xxxxx B xxx monopolist xxxx produce xx units xxx charge x price xxxxx to xxxxxxxx cost xx pB xx such x case xxx firm xx charging x price xxxxx is xxxxx than xxx average xxxx of xxxxxxxxxx and xxxxx the xxxxxxxxxx incurs xxxxxx Such xx imposition xxx act xx a xxxxxxxxxxxx for xxx producer xxx he xxx eventually xxxx the xxxxxxxx There xxxxx be xxx solutions xxx it xxxxxxxxx the xxxxxxx for xxx loss xxxxxxxx the xxxxxx best xxxxxxxxxxx where x AC xxxx a xxxxxxx alternative xxxx help xxx producer xxxx his xxxxx of xxxxxxxxxx and xxxxxx in xxx business xx total xxxxxxx A xxxxxxxx B xxxxxxxx or x stay xxx same xxxx new xxxxxxxxxx reduces xxxxxxx total xxxxx shifts xxx downward xx Figure xx a xx unregulated xxxxxxx monopoly xxxxxx B xxxxxxxx Reason xxx total xxxxxxx of xx unregulated xxxxxxxx will xxxxxxxx in xxxx of x technological xxxxxxxxxxx resulting xx lower xxxxx Since xxx monopolist xxx produce xxx same xxxxx of xxxxxx at x lower xxxx the xxxxxx difference xxxxxxx the xxxxx revenue xxx total xxxx increases xxxxxxx increasing xxx total xxxxxxx for xxx monopolist x A xxxxxxxxxxxxxxx natural xxxxxxxx Answer x Increase xxxxxx A xxxxx regulation xxxx mean xxxx the xxxxxxxxxx is xxxxxxxxx to xxx efficient xxxxxxx rule xxxxx he xxxxxx charge x price xxxxxxx than xxx marginal xxxx i x P xx In xxxx a xxxxxxxx even xxxxxx the xxxxx cost xxxx fallen xxx profits xxxxxx by xxx monopolist xx not xxxxxxxx This xxxxxxx because x reduction xx total xxxxx will xxxx lower xxxxxxxx costs xx well xxx this xxxxxxxxx in xxxxxxxx cost xxxx also xxxxxxxxx into xxxxx price xxxxxxx by xxx natural xxxxxxxxxx However xx argument xxx be xxxxxx that xx the xxxxxxxxx in xxx total xxxxx accrue xxxx to xxx fixed xxxxxxx then xxx marginal xxxx remains xxx same xxx the xxxxxxxxxx can xxx an xxxxxxxxx in xxx form xx increased xxxxxxx c x profit-regulated xxxxxxx monopoly xxxxxx C xxxx the xxxx Reason x profit xxxxxxxxx natural xxxxxxxx implies xxxx the xxxxx charged xx the xxxxxxxxxx will xx just xxxxxxxxxx to xxxxx its xxxxx of xxxxxxxxxx zero xxxxxxxx profits xxxx the xxxxx charged xx the xxxxxxxxxx will xx equal xx the xxxxxxx total xxxx ATC x Now x reduction xx the xxxxx costs xxxx mean xxxx the xxxxxxxxxx will xxxx have xx reduce xxx price xxxxxxx for xxx product xx the xxx effect xx the xxxxxxxxx in xxxxx is xxxxxxxxxx passed xx to xxx consumers xx the xxxx of xxxxx prices xxxxx the xxxxxxxxxxxxxxxx natural xxxxxxxx with xx change xx the xxxxxxx earned xx the xxxxxxxxxx Suppose x natural xxxxxxxxxx has xxxxx costs xx and x constant xxxxxxxx cost xx The xxxxxx for xxx product xx as xxxxxxx Illustrate xxxx answers xx the xxxxx Price xxx unit xxxxxxxx demanded xxxxx per xxx Answer xxxxx per xxxx Quantity xxxxxxx d xxxxx per xxx Total xxxxxxx Total xxxx Average xxxxxxx Marginal xxxxxxx Marginal xxxx Average xxxx - x - x - x - xxxxx these xxxxxxxxxx a xxxx price xxx quantity xxxx prevail xx the xxxxxxxxxx isn xxxxx t xxxxxxxxx a xxxxx a xxxxxxxx Under xxx unregulated xxxxxxxx market xxx monopolist xxxx maximize xxx profits xx Marginal xxxxxxx MR xxxxxx Marginal xxxx MC xxxxx PROFIT xxxxxxxxxxxx RULE xxx graph xxxxx illustrates xxx case xx a xxxxxxxxxx in xx unregulated xxxxx Quantity xxxxx per xxx Demand xxxxx Marginal xxxxxxxxxxxx Revenue xxxxx A xx MC xx unregulated xxxxxxxxxx will xxxxxx a xxxxx of xxx unit xxx will xxxxxxx units xxx day xx maximize xxx profits xxx point x in xxx figure xxxxx is xxx profit xxxxxxxxxx point xxx the xxxxxxxxxx where xxx Marginal xxxx equals xxx Marginal xxxxxxx b xxxx price xxxxx output xxxxxxxxxxx would xxxxx with xxxxxxxxx pricing xx p x Price x Quantity xxxxx the xxxxxxxxx pricing xxxx MC x the xxxxxxxxxxxx combination xxx been xxxxxxxxxxx in xxx figure xxxxx Quantity xxxxx per xxx Demand xxxxx Marginal xxxxxxxxxxxx Revenue xxxxx B xx P xxx price xxxxxxx by xxx producer xxxxxx the xxxxxxxx Cost xx i x per xxxx efficient xxxxxxx rule xx a xxxxx of xxx unit xxx producer xxxx produce x quantity xxxxx to xxxxx per xxx c xxxx price xxxxx output xxxxxxxxxxx would xxxxx with xxxxxx regulation x Price xxxx economic xxxxxxx c xxxxxxxx Under xxxxxx regulation xxx monopolist xx entitled xx earn xxxx zero xxxxxxxx profits x e xxx price xx the xxxx is xxxx sufficient xx cover xxx total xxxx This xxxxxxxx has xxxx illustrated xx the xxxxxx below xxxxxxxx units xxx day xxxxxx CurveMarginal xxxxxxxxxxxx RevenueATCP xxxxxx monopolist xxxxx profit xxxxxxxxxx will xxxxxxx units xxx day xxx will xxxxxx a xxxxx of xxx unit xx that xx is xxxx to xxxxx his xxxxx of xxxxxxxxxx and xxxx zero xxxxxxxx profits xxxx Price xxx unit xxxxxxxx demanded xxxxx per xxx Total xxxxxxx Total xxxx Average xxxxxxx Marginal xxxxxxx Marginal xxxx Average xxxx - x - x - x - xxxx Given xxxxx cost xxxxxxxx Marginal xxxx nbsp xxxx Formulae xxxxx Revenue xxxxx X xxxxxxxx nbsp xxxxxxx Revenue xxxxx Revenue xxxxxxxx nbsp xxxxxxxx Revenue xxxxx Revenue xxxxxxxx nbsp xxxxx Cost xxxxx Cost xxxxxxxx Cost xxxx the xxxxxxxx Cost xxx Q xxxx Average xxxx Total xxxx Quantity xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxx nbsp xxxxMore Articles From Economics
.ico)
.ico)
.ico)
.ico)
