If the government wants to regulate a natural monopoly, it will force the firm to set price equal to
A) average cost.
B) marginal cost.
C) marginal revenue.
D) None of the above.
A
You might also like to view...
Insurance works best in situations where there is
a. a high probability of a small loss. b. a low probability of a small loss. c. a high probability of a large loss. d. a low probability of a large loss. e. the level of probability and the size of the loss are irrelevant.
Economists generally recognize that rent controls cause shortages in housing, yet rent controls tend to persist. Why does this occur?
a. Many people do not understand the effects that controls cause. b. Property owners are politically unpopular. c. Many persons tend to benefit from rent controls. d. All of the above are correct.
A minimum wage law dictates
A) the minimum quantity of labor that a firm must employ. B) the lowest wage that firms may pay for labor. C) the highest wage that firms must pay for labor. D) the minimum qualifications for labor.
Which of the following is a desirable characteristic in an economy?
A. sustained deflation B. high inflation C. growing per-capita output D. cyclical unemployment