In 2014, Time Warner and Comcast announced their intention to merge. This prompted questions of monopoly because

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In 2014, Time Warner and Comcast announced their intention to merge. This prompted questions of monopoly because the combined company would supply cable access to an overwhelming majority of Americans. It also raised questions of monopsony since the combined company would be virtually the only purchaser of programming for broadcast shows. Although the merger was ultimately disallowed, assume that it had occurred. In each of the following, determine whether it is evidence of monopoly, monopsony, or neither.

a. The monthly cable fee for consumers increases significantly more than the increase in the cost of producing and delivering programs over cable.

b. Companies that advertise on cable TV find that they must pay higher rates for advertising.

c. Companies that produce broadcast shows find they must produce more shows for the same amount they were paid before.

d. Consumers find that there are more shows available for the same monthly cable fee.

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Microeconomics

ISBN: 978-1319098780

5th edition

Authors: Paul Krugman, Robin Wells

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