The collapse of AT&T's natural monopoly in long-distance telephone service was caused by
A. The takeover of the telephone industry by the U.S. government.
B. Inadequate profits.
C. Government regulation because of illegal collusion between ATamp;T and foreign competitors.
D. Satellite technology that made it easier and less expensive for new companies to provide long-distance service.
Answer: D
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Price discrimination
A) eliminates the producer surplus. B) turns consumer surplus into producer surplus. C) decreases output below the profit-maximizing level. D) lowers a monopoly's economic profit.
Suppose a roll of paper towels costs $4 at Sam's Quick Stop, a local quick stop, and the same roll of paper towels costs $1 at Big Supplies, a large, retailer located in a more remote location. If a customer's total cost of travel to Sam's Quick Stop is $2 and is $5 to Big Supplies, which of the following is true?
A) It is cheaper for the consumer to buy the paper towels at Sam's Quick Stop. B) It is more expensive for the consumer to buy the paper towels at Big Supplies. C) It is cheaper for the consumer to buy the paper towels at Big Supplies. D) The consumer is indifferent as to where they buy the paper towels.
Each of the following would cause an increase in the supply of baseballs EXCEPT
A) an improvement in technology. B) a decrease in the cost of labor used to produce baseballs. C) an expectation that the price of baseballs will rise in the future. D) an increase in the number of baseball producers.
If price equals 0, then consumer surplus
a. is 0 b. is maximized c. is price times quantity d. is equal to marginal utility e. cannot be determined