If a natural monopoly is forced to follow a policy of average-cost pricing, the monopolist will:
A. earn economic profits greater than zero.
B. charge a higher price than if the monopolist were not regulated.
C. charge a lower price than if the monopolist were not regulated.
D. decrease output below that in an unregulated pricing policy.
Answer: C
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Refer to the table above. Maximum social surplus is:
A) $10. B) $12. C) $14. D) $16.
Industry demand is given by: QD = 1000 – P
All firms in the industry have identical and constant marginal and average costs of $50/unit. a. If the industry is perfectly competitive, what will industry output be? What will be the equilibrium price? What profit will each firm earn? b. Now suppose that there are five firms in the industry, and that they collude to set price. What price will they set? What will be the output of each firm? What will be the profit of each firm?
Technological advances that reduce pollution fall into which category of innovation?
A. Productivity-enhancing innovation B. Pollution reduction does not fit into any of the categories of innovation C. Quality-of-life innovation D. Creation of new goods and services
To keep the price of gas from rising quickly after a hurricane, the government sometimes institutes price ceilings on the price of gasoline. These price ceilings cause ________ in the gasoline market.
A. surpluses B. shortages C. movement of the demand curve D. movement along the demand curve