Final exam - Lecture 2 Notes

Question 1

How to control monopolies?

Answer 1

Regulate

Question 2

◦The point is to control the monopoly on what?

Answer 2

on how they run there businesses.

Question 3

Nv energy was told to sell for a flat fee so it benefit the consumers. The government sets
the price (______/_____) Then they add 16% on top of that and they calculate what
there price should be.

Answer 3

(Percentage/Cost).

Question 4

◦Capture

Answer 4

‣ Firms buy you after you regulate them to work for them.

Question 5

◦Most rules and regulation is to protect who?

Answer 5

consumers

Question 6

◦if we leave the monopoly alone they will restrict the output to increase the _____.

Answer 6

price

Question 7

◦By regulating it helps the consumers but the agencies are more friendly to the people are
regulating them instead of the consumers to ______ them.

Answer 7

capture

Question 8

Why would they have someone who regulated them?

Answer 8

◦They would rather have a person who already regulated them since they have work
experience than having someone who is an outsider.

Question 9

Why does the businesses want to increase cost

Answer 9

since u get a percentage over cost

Question 10

Why do we have monopolies?

Answer 10

Societal advantages.

Don’t want so many wires running for businesses rather just have one company who does it.

Question 11

After allowing monopolies what do we do to stop them from doing bad things?

Answer 11

we regulate them

Question 12

What’s another way on how we control monopolies

Answer 12

Kill

Question 13

How does the U.S and Europe kill monopolies?

Answer 13

US = Anti-trust
Europe= Competition policy

Question 14

◦Trust

Answer 14

t means that all the companies in the industry get together decide what the price is
going to be or who gets what instead of there being competition they companies are
working together to maximizing there profits.

Question 15

Why does competition help consumers?

Answer 15

it helps the consumer as the companies will have to compete against each other to be better than the other.

Question 16

◦Sherman Act (1890)

Answer 16

‣ It allows you as a consumer to go after the companies instead of the government.
‣ You can sue as an individual if you think you’re damaged by a monopoly.

Question 17

◦Sherman act did 3 rules

Answer 17

◦1. Illegal to be a monopoly
◦2. Illegal to attempt to be
◦3. Illegal to conspire to be

Question 18

◦Clayton Act, Federal Trade Commission: Unions, Unfair or Deceptive Practices, Mergerse,
Interlocking Directors, etc.

Answer 18

‣ Unions cant not be monopolies they are exempt from monopolies
‣ Interlocking Directors
• Same directors of the same companies
• It forbids you to sit as a Directors of 2 companies
‣ federal trade commission
• There is responsible truth in advertisement
• Listeerine said it cures the common cold. Now it says it cleans germs
• The only people who are exempt from federal trade commission is politicians.
• They regulate merges. The 2 companies who want to merge together need to get
government permission
◦The supreme court creates the rule of reason.
‣ Suppose there is 2 gas stations in a town and one of it dies and the other one is the
only seller its not illegal but it is monopoly.
◦You cant just buy all your competitiors

Question 19

What is another thing that the Sherman Act did?

Answer 19

Trouble damages

Question 20

What are trouble damages?

Answer 20

the fine is three times the damage

Question 21

Why does the Congress have the ability to control monopolies ?

Answer 21

Interstate commerce

Question 22

Why is it that the government can set the speed limit?

Answer 22

interstate commerce

Question 23

Why is it easy and bad for consumers to have a monopoly surrounding them?

Answer 23

It helps the consumers to have one company since it’s a lot easier to set up everything (wires, not having multiple trash companies, etc).

It’s bad since there is less benefits for consumers since less innovation and higher prices, etc.

Question 24

What are exempt from the anti-trust laws?

Answer 24

Unions