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The Walt Disney Company, the creators of Mickey Mouse 




1.	Question: Each of the following firms possesses market power. Explain its source. a. Merck, the producer of the patented cholesterol-lowering drug Zetia b. Chiquita, a supplier of bananas and owner of most banana plantations c. The Walt Disney Company, the creators of Mickey Mouse 
2.	Question: Skyscraper City has a subway system, for which a one-way fare is $1.50. There is pressure on the mayor to reduce the fee by one-third, to $1.00. The mayor is dismayed, thinking that this will mean Skyscraper City is losing one-third of its revenue from sales of subway tickets. The mayor- economic adviser reminds her that she is focusing only on the price effect and ignoring the quantity effect. Explain why the mayor- estimate of a one-third loss of revenue is likely to be an overestimate. Illustrate with a diagram. 




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