The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. What is the area of deadweight loss when Light-U-Up is regulated and follows an average cost pricing rule?
A) acg
B) degf
C) deg
D) There is no deadweight loss.
C
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If there are only two goods in the economy, one whose price rises by 1 percent and one by 6 percent, it is possible that inflation is:
A. 6 percent. B. 1 percent. C. 2 percent. D. 7 percent.
Two goods are complements if:
A. an increase in the price of one good leads to a decrease in demand for the other. B. people tend to consume either one or the other. C. an increase in the price of one good leads to in increase in demand for the other. D. there are no substitutes for either of them.
Which of the following would be expected if the tariff on foreign-produced shoes were decreased?
a. The domestic price of shoes would fall.
b. The supply of foreign shoes to the domestic market would decline, causing shoe prices to rise.
c. The number of unemployed workers in the domestic shoe industry would decline.
d. The demand for foreign-produced shoes would decrease, causing the price of shoes to increase in other nations.
Suppose ABC Dairy is one firm competing in the perfectly competitive market for milk. Now suppose ABC Dairy decides to produce only organic milk. Which of the following best describes the effects of this change in the market?
A. ABC Dairy is differentiating its product and will likely be able to charge a higher price than before. B. ABC Dairy will still be a price taker because it is still operating in a perfectly competitive market. C. ABC Dairy will have a monopoly on organic milk due to very high entry barriers. D. The other dairy firms will produce with excess capacity, but ABC Dairy will be efficient.