Temple University

Department of Economics

Antitrust and Regulation


1. Pictured below are the long run cost and demand curves for monopoly producers of futons (Fred's Futons, Inc.) and electricity (Ed's Electricity Corp.). Indicate    the monopoly output.
Fred's Futons: Q1, Q2, Q3, Q4
Ed's Electricity: Q1, Q2, Q3, Q4

2. Against which firm, either or both, could the U.S. Department of Justice bring a justifiable monopolization case and press for having the firm subdivided as a remedy?
Fred's Futons Ed's Electricity, Both.

3. Which firm, either or both, should be subjected to price regulation?
Fred's Futons Ed's Electricity, Both.

4. Suppose that the public utilities commission has decided to regulate Ed's Electricity. What should be the regulated price, or prices if you recommend a two-part tariff? Check all of the boxes that apply: P1, P2, P3, P4


futons.jpg (15223 bytes)

electricity.jpg (19813 bytes)

Fred's Futons

Ed's Electricity