var imagesXXXlarge = ",,,,"; var imagesXXlarge = ",,,"; var imagesXlarge = ",,,,"; var imagesLarge = ",,,,,"; var imagesMedium = ",,,,,"; var imagesSmall = "krugmanap2e-ch77-fig-2,,,,,"; //$('#krugmanapecon2e_mod50_cyu_2').attr('data-show-answer', 'array'); xBookUtils.showAnswers['krugmanapecon2e_mod77_cyu_1a'] = "This practice would be illegal because it constitutes a tying arrangement."; xBookUtils.showAnswers['krugmanapecon2e_mod77_cyu_1b'] = "This practice would be illegal because it constitutes exclusive dealing. "; xBookUtils.showAnswers['krugmanapecon2e_mod77_cyu_1c'] = "This is legal because the merger does not lead to monopolization."; xBookUtils.showAnswers['krugmanapecon2e_mod77_cyu_2a'] = "Wind energy is created by a natural monopoly, which means that marginal cost is below average total cost in the relevant range of production. (In fact, the marginal cost of wind energy is virtually zero, because the wind itself is free.) Thus, a requirement to charge a price equal to marginal cost would result in a price below average total cost and cause the firm to incur a loss. Only with subsidies could the firm survive with marginal cost pricing. If policy makers chose average cost pricing instead, the operator of the wind farm would make a normal profit and no subsidy would be necessary."; xBookUtils.showAnswers['krugmanapecon2e_mod77_fr_2_rubric'] = "
Rubric for FRQ 2 (6 points)
1 point: Antitrust policy
1 point: Prohibit practices that create monopolies and break up existing monopolies.
1 point: Public ownership
1 point: Have the government operate the monopoly with the goal of efficiency rather than profit.
1 point: Price regulation
1 point: Restrict price to the lowest price that does not cause losses, which is the price at which the average total cost curve intersects the demand curve.
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