If government regulators force a natural monopoly to produce where price equals marginal cost, the monopoly will earn
a. a "fair return"
b. positive economic profit
c. zero economic profit
d. negative economic profit
e. greater economic profit than if it were unregulated
D
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For many years the U.S. government imposed quotas on cheap, Middle Eastern oil imports. The U.S. consumer consequently paid $3 billion more per year for oil products. A likely rationale for such a policy is
A. people in the oil industry deserved the transfer. B. conservation. C. one cannot be dependent on foreign supplies of so crucial a resource. D. American oil was of higher quality and deserved a higher price.
In comparison to an employer in a competitive labor market, a monopsony employer hires ________ workers and produces ________ output
A) fewer; less B) fewer; more C) more; less D) more; more
In a perfectly competitive market the term "price taker" applies to
A) sellers but not buyers. B) only the smallest sellers and buyers. C) buyers but not sellers. D) sellers and buyers.
In the country levying the tariff, the tariff will
A) increase both consumer and producer surplus. B) decrease both the consumer and producer surplus. C) decrease consumer surplus and increase producer surplus. D) increase consumer surplus and decrease producer surplus. E) decrease consumer surplus but leave producers surplus unchanged.