Output regulation for a natural monopolist
A. May jeopardize equity goals.
B. May require large government subsidies.
C. Is consistent with marginal cost pricing.
D. Encourages bloated costs.
Answer: A
You might also like to view...
A newspaper headline reads: "Fed Cuts Federal Funds Rate for Fifth Time This Year." This headline indicates that the Federal Reserve is most likely trying to ________.
A. ease monetary policy B. tighten monetary policy C. raise interest rates D. reduce inflation in the economy
What does it mean for a producer to internalize an externality?
A) The producer is limiting outsourced production. B) The producer is prohibited from producing products which generate externalities. C) The producer must find ways to address externality problems which extend beyond geographic borders. D) The producer is forced to factor into production costs the cost of the externalities created in their production of output.
In the market for resources, demand and supply:
a. do not behave in the same way as they do in product markets. b. behave in exactly the same way as they do in product markets. c. curves usually do not intersect at equilibrium. d. are both controlled by firms. e. are both controlled by households
Suppose the installation of sound absorbing materials in the walls of an auto body shop would cost $4,000, and would generate $25,000 in increased property values for an adjacent neighbor. Completely reducing all noise would require extensive retrofitting, costing $100,000, and would generate $30,000 increase in property values for the adjacent neighbor. Thus there are net social benefits to
installing the sound-absorbing materials. Which of the following would be consistent with the Coase Theorem? a. If the area is zoned industrial and the shop has the right to emit noise, the efficient solution would be realized if the two parties negotiated and the neighbor bought sound-absorbing materials for the shop. b. If the area is zoned industrial and the shop has the right to emit noise, the efficient solution would be realized when the neighbor appealed to the EPA for regulations requiring zero noise emissions and thus complete retrofitting of the shop. c. If the area is zoned residential, and the neighbor has the right to a relatively quiet environment, the efficient solution would be realized by requiring the shop owner and the building owner to share the cost of reducing noise emissions to zero. d. If the area is zoned residential, and the neighbor has the right to a relatively quiet environment, the efficient solution would be realized by requiring the neighbor to completely retrofit the building to reduce noise emissions to zero.