A

1. What is the difference between laissez faire and mercantilism?

2. Why should the government desire to regulate industry ?

3. Who was Adam Smith?

4. Why is he often referred to as the "father of economics"?

5. What is the relation between competition and industrial improvement ?

6. What are some of the wastes of competition?

7. State the law of monopoly price.

8. Why is the monopolist primarily concerned with the largest net return ?

9. What limitations are placed on monopoly price?

10. How does a monopoly come into existence?

11. Is monopoly synonymous with big business?

12. Which monopolist would have the most power in fixing price, and why: a. The one dealing in necessities?

b. The one dealing in luxuries?

B

1. Notice carefully how several competing retailers in the same line carry on their businesses.

a. Which has the best site?

b. Which has the largest stock of goods ?

c. Which has the most attractive window displays?

d. Which has the most efficient delivery system?

e. Which advertises the most extensively?

/. Why does not some one of them combine all these good points in his business? g. What would be the result if he did so?

2. Observe the wastes of competition in retailing arising from duplicated efforts in the matter of delivery, advertising, rents, lighting, and heating.

a. Suggest ways to eliminate any of these wastes.

b. Would you suggest government regulation? Why, or why not?

c. What attempts are being made in your community to eliminate wastes of competition?

3. Do you know of any former competitive industry that is now monopolistic ? If so, did the change affect prices ? How ?

4. Make a list of former monopolies which do not now exist.

a. Did they become insolvent? If so, why?

b. Did they change to competitive conditions? Why?

5. Suppose you were a watchcase manufacturer.

a. At what point would you fix the price of your product ?

b. Would you manufacture different grades of watchcases?

Why, or why not?

c. How would you meet any competition that might arise ?

6. Suppose you conducted a monopolistic business with a capital of $100,000. If your net income from the business was $75,000 a year, how could you make the return appear to be much less?

C

1. Discuss the common saying that "competition is the life of trade."

2. "The monopolist has it in his power to fix prices at whatever point it suits his fancy." a. May the monopolist ignore demand? Explain.

b. Can the monopolist control demand? Explain.

c. Are high prices alway the most advantageous to the monopolist? Why, or why not?

d. Does the elasticity of the monopolized good affect the monopoly price ?

e. Would a wheat monopolist and a diamond monopolist be governed by the same consideration? f. In what three ways is the monopolist restricted in his price-making ?

3. Suppose a manufacturer of talking machines should absorb his competitors.

a. What would be the effect on production?

b. How would prices be affected ?

c. Would new competitors be likely to arise ? Why ?

4. "A monopoly is often advantageous to consumers, for prices are less than they would be under competitive conditions." How can this be true?

5. The belief generally prevailed a few years ago that any manufacturing monopoly was sure to succeed.

a. Account for this belief.

b. Has experience justified this belief ? Explain.

c. What factors were overlooked by those who held this belief?

d. How has the attitude of society toward monopolies changed?

Supplementary Reading

Bullock, Introduction to the Study of Economics, 3d ed., pages 315-342.

Ely, Outlines of Economics, 3d ed., pages 189-211.

Fetter, Economics Vol. II, pages 427-456.

Seager, Principles of Economics, pages 198-228.

Seligman, Principles of Economics, 5th ed., pages 139-153, 337-350.

Taussig, Principles of Economics, 2d ed., Vol. I, pages 199-297.