Joe, Along with Two Friends, Bought a Peat Bog with the Idea

question 39

Essay

Joe, along with two friends, bought a peat bog with the idea of incorporating a corporation and reselling it to promote the development of the peat bog. Joe bought the bog for $40,000 and, when the corporation was incorporated, had himself and his two friends named as directors. They then held a meeting and on the first order of business, they bought the bog from themselves for $500,000. Then they voted to sell all of the shares of the business to five interested businessmen for $500,000, based on the value of the sole asset of the corporation, the peat bog. When the businessmen found out what had happened, they sued Joe and his friends. Explain the nature of the complaint and the likely outcome.

Recognize the profit-maximizing conditions for a monopolist and how these conditions relate to economic profits.

Comprehend the concept of deadweight loss due to monopoly power and its impact on social welfare.

Understand the characteristics and effects of price discrimination by monopolists.

Recognize the role of government regulation and antitrust laws in addressing monopoly power.

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Definitions:

Trade Agreement

An agreement between two or more nations regarding the conditions of trade between them.

Canada Proud

A specific reference, potentially associated with expressions of national pride or social movements aimed at promoting Canada's culture, values, and interests.

HR Manager's Role

The responsibilities of a human resources manager, which include overseeing recruitment, managing employee relations, developing policies, and supporting organizational strategy.