Why can't the government force a natural monopolist to produce the competitive output?
What will be an ideal response?
The competitive solution would be where MC = ATC. At that point the natural monopolist is losing money and would go out of business if forced to produce there.
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
Moving downward on a downward sloping linear demand curve, the absolute value of the price elasticity of demand
A) is constant. B) increases continuously. C) decreases continuously. D) may either increase or decrease.
The consequences of price discrimination are
a. Consummate more transactions b. Extract more consumer surplus c. Increase producer surplus d. All of the above
Federal subsidies to higher education benefit
a. only the student b. only universities c. both universities and students d. neither universities nor students