To restrict a firm's monopoly power, why can't antitrust authorities just set a floor or a ceiling in the market? OA. It is difficult to set a fair price, so regulators do not get involved in the pricing decisions of any monopolists. B. It is difficult to set a fair price, and even if regulators did, the firm would then have no incentive to innovate. OC. The government does not have the power to dictate what a firm can charge; it can only stop mergers. OD. Floors or ceilings lead to inefficiency and deadweight loss, which can be avoided if the monopoly sets its own price.
To restrict a firm's monopoly power, why can't antitrust authorities just set a floor or a ceiling in the market? OA. It is difficult to set a fair price, so regulators do not get involved in the pricing decisions of any monopolists. B. It is difficult to set a fair price, and even if regulators did, the firm would then have no incentive to innovate. OC. The government does not have the power to dictate what a firm can charge; it can only stop mergers. OD. Floors or ceilings lead to inefficiency and deadweight loss, which can be avoided if the monopoly sets its own price.
Chapter9: Monopoly
Section: Chapter Questions
Problem 7SQP
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To restrict a firm's monopoly power, why can't antitrust authorities just set a floor or a ceiling in the market?
OA. It is difficult to set a fair price, so regulators do not get involved in the pricing decisions of any monopolists.
B. It is difficult to set a fair price, and even if regulators did, the firm would then have no incentive to innovate.
C. The government does not have the power to dictate what a firm can charge; it can only stop mergers.
D. Floors or ceilings lead to inefficiency and deadweight loss, which can be avoided if the monopoly sets its own
price.
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