Problem
1. Use the following list, which gives some information about seven firms.
- Coca-Cola cuts its price below that of Pepsi in an attempt to increase its market share.
- A single firm, protected by a barrier to entry, produces a personal service that has no close substitutes.
- A barrier to entry exists, but the good has some close substitutes.
- A firm offers discounts to students and seniors.
- A firm can sell any quantity it chooses at the going price.
- The government issues Nike an exclusive licence to produce golf balls.
- A firm experiences economies of scale even when it produces the quantity that meets the entire market demand.
In which of the seven cases might monopoly arise?
2. Use the following list, which gives some information about seven firms.
- Coca-Cola cuts its price below that of Pepsi in an attempt to increase its market share.
- A single firm, protected by a barrier to entry, produces a personal service that has no close substitutes.
- A barrier to entry exists, but the good has some close substitutes.
- A firm offers discounts to students and seniors.
- A firm can sell any quantity it chooses at the going price.
- The government issues Nike an exclusive licence to produce golf balls.
- A firm experiences economies of scale even when it produces the quantity that meets the entire market demand.
Which of the seven cases are natural monopolies and which are legal monopolies? Which can price discriminate, which cannot, and why?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.