There is no deadweight loss if the regulatory rule for a natural monopoly
A) is an average cost pricing rule.
B) sets price at a level that enables the regulated firm to earn a specified rate of return on its capital.
C) is a marginal cost pricing rule.
D) prevents the firm from engaging in any form of price discrimination.
C
You might also like to view...
A discouraged worker is one who:
a. is underqualified for the current job. b. dislikes the current job but is afraid to quit. c. drops out of the civilian labor force because he/she cannot find a job. d. quits his/her job because the possibility of advancement was very low. e. is overqualified for the current job.
Voluntarism often has proved to be weak and unreliable. Does it still have a place in controlling activities that damage the environment?
Which of the following statements is correct?
a. If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling more units at a lower price per unit. b. If the monopolist's marginal revenue is greater than its marginal cost, the monopolist can increase profit by selling fewer units at a higher price per unit. c. When a monopolist produces where price equals the minimum of average total cost, it earns a positive economic profit. d. If the monopolist is earning a positive economic profit, it must be producing where MR = MC.
There are ten states in the democratic nation of Katlandia, and each state has ten thousand residents. Although incomes vary, each Katlandian pays a tax equal to the total cost of all government projects divided by the number of residents in the country. Currently, two states each have one army base. An army base adds $2 million to a state's local economy each year. In addition, in terms of increased security, the annual marginal benefit to Katlandia of having an additional army base is shown below. The total cost of an army base is $8 million per year.The marginal benefit of adding a third army base equals the local marginal benefit of $2 million plus
the marginal benefit to Katlandia of ________. A. $22.5 million B. $0 C. $1 million D. $3 million