If we compare regulating a natural monopoly using a marginal cost pricing rule to using an average cost pricing rule, we see that output is
A) greater with marginal cost pricing, but average cost pricing allows for costs to be covered.
B) the same under both cases, but the profit is greater with average cost pricing.
C) greater under average cost pricing, but profits are greater with marginal cost pricing.
D) the same but profits are greater with marginal cost pricing.
E) greater with marginal cost pricing, and the firm's profit is larger with marginal cost pricing.
A
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If the production of a good creates an external cost, is the supply curve the same as the marginal social cost or the same as the marginal private cost curve or both?
What will be an ideal response?
The elimination of hourly rate assembly line jobs for unskilled workers by robots is an example of
A) involuntary unemployment. B) mismatch unemployment. C) cyclical unemployment. D) turnover unemployment.
Richard Bland quit his job as an accounting professor to start his own restaurant. He gave up a salary of $50,000 per year and withdrew $100,000 in bank CDs earning 5 percent to buy a building and equipment. In the restaurant’s first year it had direct expenses of $75,000 and revenues of $150,000. The restaurant’s economic profit was
A. $15,000. B. $20,000. C. $75,000. D. not possible to determine from the information given.
A major criticism of static tax analysis is that it
A) uses only ad valorem taxes. B) does not use ad valorem taxes. C) ignores the incentive effects created by higher tax rates. D) assumes that the tax base will not increase.