ASSIGNMENT | Perfectly Competitive and Monopoly Firms

Unit 5 Assignment: Perfectly Competitive and Monopoly Firms

Student Name:

In this Assignment, you will calculate total cost, total revenue, and total profit/loss. Based on the computed results, you will determine the optimal quantity of output that maximizes profit under a perfectly competitive market. Moreover, you will evaluate the antitrust laws and merger guidelines based on market shares of firms to prevent a monopoly and promote competition in the economy.

Instructions: This Assignment requires a combination of short paragraph answers and computations. Answer all of the following questions in this document. You are required to follow proper APA format. Read the Criteria section below for more information before you begin this Assignment.

In this Assignment, you will be assessed on the following outcome:

GEL-7.02: Apply ethical reasoning to ethical issues within your field of study.

1. How does the demand curve faced by a perfectly competitive firm differ from the market demand curve in a perfectly competitive market? Explain.

• How does the profit maximization condition for a monopoly differ from that for a perfectly competitive firm? How does this difference impact efficiency under each market structure? Explain.

• The following table provides market share information about the soft-drink industry. Review antitrust laws and the merger guidelines under Chapter 15: “Monopoly and Antitrust Policy” and conduct your own research on U.S. antitrust laws in the Online Library or the internet to answer the following questions.

Company	Market Share
Coca-Cola	37%
Pepsi-Co	35%
Cadbury Schweppers	17%
Other	11%

1. Compute the Herfindahl-Hirschman Index (HHI) market concentration rules that guide mergers between companies to prevent monopoly creation and to promote competition among firms. Based on the market shares of the companies in the table, the merger of which companies will be highly concentrated? What ethical rules will be affected based on U.S. antitrust laws and merger guidelines in regard to a highly concentrated market?

• Do you think the Department of Justice and the Federal Trade Commission would approve a merger between any two of the first three companies listed in the table based U.S. merger guidelines and antitrust laws? Explain.

• Do you think this market has barriers to entry? If yes, what might be the market barriers?

References (add references in APA format in the space below)

Criteria

• This Assignment should be completed in this Word document.
• It should be written in Standard English and demonstrate exceptional content, organization, style, and grammar and mechanics.
• Respond to the questions in a thorough manner, providing specific examples where asked.
• Your sources and content should follow proper APA format (A title page is not required). Review the APA formats found in the Writing Resources accessed through the Academic Success Center within the Academic Tools area of the course.
• Review the grading rubric to ensure all points have been captured in the paper.

Directions for Submitting your Assignment

Complete your Assignment in this Word document. Submit your Assignment by the end of Unit 5 to the Unit 5 Assignment Dropbox. Make sure to save a copy of your work and be sure to confirm that your file uploaded correctly.

Unit 5 Assignment	Points Possible	Points Earned
Content and Analysis
Problem #1 Explained how the demand curve faced by a perfectly competitive firm differs from the market demand curve in a perfectly competitive market.	10
Problem #2 Explained how the profit maximization condition for a monopoly differs from that for a perfectly competitive firm.	5
Explained how this difference impacted efficiency under each market structure.	5
Problem #3   a. Computed the Herfindahl-Hirschman Index (HHI) market concentration rules that guide mergers between companies to prevent monopoly creation and promotes competition among firms.	4
Indicted the merger of which companies will be highly concentrated based on the market shares of the companies in the table.	4
Explained what ethical rules will be affected based on U.S. antitrust laws and merger guidelines in regard to a highly concentrated market.	4
b. Explained if the Department of Justice and the Federal Trade Commission would approve a merger between any two of the first three companies listed in the table based U.S. merger guidelines and antitrust laws.	4
c. Indicated if this market has barriers to entry, and if yes, what the market barriers might be.	4
Writing style, grammar, and APA format.	5
Total	45

SAMPLE SOLUTION

1. How does the demand curve faced by a perfectly competitive firm differ from the market demand curve in a perfectly competitive market? Explain.
   In a perfectly competitive firm, the demand curve is a straight horizontal line, different from that of a perfectly competitive market which slopes downwards. This implies that the demand for the goods offered by the firm is perfectly elastic. Since the market has many firms offering homogenous products, the firm would not risk raising the price of…