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MBA Accounting

1. In what way do licensing, patents, import taxes, and import quotas restrict competition?

2. Why is it likely that in a system of private education (i.e., a system in which individuals pay for their own education) there will be underinvestment in education?

3. Determine if the justice department would challenge a merger between two firms in an industry with 10 equal-sized firms, based on its 1984 Herfindahl-index guidelines only.

4. Explain:
(a) in what way the U.S trucking industry exemplified the capture theory hypothesis of government regulation prior to the passage of the Motor Carrier Act of 1980 and
(b) the result of the passage of the Motor Carrier Act in 1980.

5. Explain:
(a) Why do most firms produce more than one product?
(b) What is the rule for profit maximization for a multiproduct firm?
(c) Why would a firm produce a product on which it makes zero profits?

Solution Preview

Here are the answers to your questions:

2. Licensing, patents, import taxes, and import quotas impose lots of extra expenses on a company that uses one or all of those as part of its business. Hence it may be harder for it to, for instance, reduce the price to gain the biggest market share.

5. To begin with, there will be social class division which would bring the fact that many people wouldn't be able to afford their education. At the same time, people who can afford it, once they are done, they are not going to contribute to the system since they don't need it. If we consider a mixed system of education (that exists nowadays in the US), ...

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