Under what conditions might a monopoly be more efficient than a perfectly competitive firm?
When there is a natural monopoly, one firm takes advantage of economies of scale that cannot be fully exploited by a smaller firm, thus producing at a lower ATC (and perhaps selling at a lower price). Often, however, regulation is necessary to compel a natural monopoly to produce near the efficient level of output.
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Let the production function be q=ALaKb. The function exhibits constant returns to scale if
A) a + b = 1. B) a + b > 1. C) a + b < 1. D) Cannot be determined with the information given.
Inflation can be measured using either the GDP deflator or the consumer price index
a. True b. False Indicate whether the statement is true or false
You put $150 in the bank two years ago and forgot about it. The bank sends you a notice that you now have $169.34 in your account. What interest rate did you earn?
a. 5.50 percent b. 5.65 percent c. 6.25 percent d. 7.05 percent
Refer to the above figure. The rational expectations hypothesis implies that an anticipated decrease in aggregate demand from AD2 to AD1 will
A. shift the aggregate supply (AS) curve to the left. B. move the economy from b to c. C. move the economy from c to a. D. move the economy from b to a.