A natural monopoly that is regulated to set its price equal to its marginal cost
A) incurs an economic loss.
B) makes zero economic profit.
C) makes an economic profit.
D) creates the maximum deadweight loss.
A
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When regulated using rate of return regulation, who benefits from the practice of some natural monopolies to count sumptuous offices, free baseball tickets, golf excursions, and limousines as costs of production?
A) stockholders B) managers of the monopoly C) customers of the monopoly D) regulators of the industry E) None of the above answers is correct.
Microeconomics focuses on
A) the relationships among the different parts of the economy. B) the totals, or aggregates, of the economy. C) unemployment. D) business cycles.
Which of the following statements correctly characterizes the elasticity of demand for food?
a. While food demand is not very responsive to changes in price, increases in income produce big increases in the demand for food. b. As income increases, the quantity demanded of food decreases. c. If the price of food falls by 5 percent, quantity demanded will rise by less than 5 percent. d. People consume the same amount of food regardless of the price of food.
Which of the following would shift the entire supply curve for electricity to the left?
a. a decrease in the price per unit of electricity b. a decrease in the price of coal used to generate electricity c. new EPA regulations that force the closing of the worst polluting coal-burning power plants d. a decrease in the price of alternative forms of energy e. a technological improvement that reduces the cost of producing electricity