Price-cap regulation not only motivates cost control, it can also motivate socially desirable pricing
Indicate whether the statement is true or false
T By breaking the monopoly's demand curve connection between price and quantity, price-cap regulation can motivate an approach to Ramsey pricing.
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Government bureaucrats want larger budgets
A. because salaries are sometimes tied to budget size. B. to fulfill an "empire building" tendency. C. because it may be necessary to ensure marginal benefits of output equal marginal costs. D. all of these answer options are correct.
Because it is generally difficult for economists to user experiments to generate data, what must they generally do?
a) do without data b) use whatever data the world gives them c) select a committee of economists to make up data for all economists to use d) use hypothetical, computer-generated data
(Consider This) According to the Coase theorem:
A. government should levy excise taxes on firms that generate spillover or external costs. B. taxes should be levied such that they change private behavior as little as possible. C. private individuals can often negotiate their own resolution of externality problems, without the need for government intervention. D. private firms should not provide public goods.
If a given reduction in market demand causes the market equilibrium price to decrease by a very large percentage while equilibrium quantity purchased decreases by a very small percentage,
A. market supply is perfectly inelastic. B. market supply is perfectly elastic. C. market supply is elastic (but not perfectly elastic). D. market supply is inelastic (but not perfectly inelastic).