Refer to Figure 15-10. Compared to a perfectly competitive market, consumer surplus is lower in a monopoly by an amount equal to the

Fred enjoys smoking cigars, but his wife Wilma feels ill whenever she is around cigar smoke. Use the Coase theorem to explain how this problem could be solved without government involvement

What will be an ideal response?

The video rental market can be described as a monopolistically competitive market. As a result of the economic profit earned by the first video rental outlets,

a. existing firms were able to successfully lobby the government for patent protection b. competitors were attracted to the industry, and their entry reduced economic profit c. demand dried up d. Blockbuster saw an opportunity to take over the industry e. competitors were discouraged from entering the industry