Question 1
Refer to the information provided in Figure 13.9 below to answer the question(s) that follow.
Refer to Figure 13.9. If Ohio Edison engages in rent-seeking behavior to maintain their monopoly, the true ________ is
BEC and the portion of area
FGBE that pays for the rent-seeking behavior.
◦ consumer surplus
◦ net social cost of monopoly
◦ producer surplus
◦ net social gain from monopoly
Question 2
A monopolist
◦ faces the same pressures to cut costs as a competitive firm does.
◦ must use the most efficient technology or it will be driven out of business by firms that do.
◦ is protected from competition by barriers to entry.
◦ faces the same pressures to innovate as a competitive firm does.
