If an average cost pricing rule is imposed on the natural monopoly in the figure above, then the firm will
A) incur an economic loss.
B) make zero economic profit, that is, its owners make a normal profit.
C) make an economic profit of $4 million.
D) make an economic profit of $9 million.
B
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Why does the supply curve of the perfectly competitive industry shift to the right whenever a new firm enters the industry?
The Coase theorem asserts that the private market will always solve the problem of externalities and allocate resources efficiently
a. even if private parties experience substantial costs of bargaining. b. even if the initial distribution of legal rights is skewed in favor of some private parties over others. c. only when there is a large number of private parties that engage in bargaining. d. All of the above are correct.
Producers are willing to offer greater quantities for sale at higher prices because
What will be an ideal response?
Why do increasing returns to scale in an industry make it more likely that the industry will be oligopolistic rather than perfectly competitive?
What will be an ideal response?